TIDMTOM
RNS Number : 2836Y
TomCo Energy PLC
13 January 2022
13 January 2022
TOMCO ENERGY PLC
("TomCo" or the "Company")
Reserves Report for TSHII Site
TomCo Energy plc (AIM: TOM), the US operating oil development
group focused on using innovative technology to unlock
unconventional hydrocarbon resources, is pleased to announce the
receipt of an independent report commissioned from Netherland,
Sewell & Associates, Inc. ("NSAI") estimating the oil reserves,
associated marketable sand volumes, and future net revenue, as of
31 December 2021, in respect of a potential commercial scale
project on the mining properties comprising the Tar Sands Holdings
II LLC ("TSHII") site located in the Uinta Basin, Utah, United
States (the "Report") . As previously announced, TomCo's wholly
owned subsidiary, Greenfield Energy LLC, ("Greenfield"), owns a 10%
Membership Interest in TSHII with an exclusive option, at its sole
discretion, to acquire the remaining 90% of the Membership
Interests for additional cash consideration up to 31 December
2022.
Highlights
-- NSAI have estimated the proved ("1P"), proved plus probable
("2P"), and proved plus probable plus possible ("3P") oil reserves,
associated marketable sand volumes, and future net revenue, as at
31 December 2021 in respect of a 100 per cent. interest in a
potential commercial scale project on the mining properties
comprising the TSHII site
-- NSAI estimate 1P oil reserves of 22.8 million barrels of oil
("bbls"), 2P oil reserves of 33.6 million bbls and 3P oil reserves
of 44.3 million bbls
-- NSAI further estimate associated volumes of marketable sand
at 22.8 million tonnes (1P), 41.2 million tonnes (2P) and 59.8
million tonnes (3P)
-- Total estimated undiscounted future net revenues (as
described further below) range from US$942 million based on 1P
reserves to approximately US$2.5 billion based on 3P reserves in
respect of a gross 100% interest in TSHII
-- Estimated discounted future net revenues (as described
further below) attributable to TomCo's current 10 per cent.
interest in TSII range from approximately US$30.5 million based on
1P reserves to approximately US$57.6 million based on 3P
reserves
Commenting, John Potter, CEO of TomCo, said : "We are delighted
with the findings of NSAI's Report. The Report serves to confirm
our view that the TSHII site contains substantial economic
resources, both in terms of oil and marketable sand, that we are
focussed on seeking to exploit.
" Greenfield continues to progress its previously announced
plans to pursue both the drilling of certain near-term oil
production wells and, thereafter, the potential acquisition of the
balancing 90% of the Membership Interests in TSHII and construction
of its first commercial scale plant on the site, all of which
remain subject to securing the requisite funding. We look forward
to providing further updates in due course."
Report Details
NSAI have estimated the proved (1P), proved plus probable (2P),
and proved plus probable plus possible (3P) oil reserves,
associated marketable sand volumes, and future net revenue, as of
31 December 2021 in respect of a 100 per cent. Interest in a
potential commercial scale project situated on the mining
properties comprising the TSHII site in the Uinta Basin, Utah,
United States.
The Report was prepared using certain price and cost parameters
specified by TomCo. The reserves estimates in the Report were
prepared in accordance with the definitions and guidelines set out
in the 2018 Petroleum Resources Management System ("PRMS") approved
by the Society of Petroleum Engineers ("SPE"). Although marketable
sand volumes are not hydrocarbons, NSAI used the 2018 PRMS as the
framework for the categorisation of such volumes and their
associated revenues.
In the first half of 2021, Greenfield operated Petroteq Energy
Inc's existing oil sands pilot plant at Asphalt Ridge, Utah (the
"POSP") in order to demonstrate the feasibility of mining shallow
tar sands using conventional open pits and applying solvents to
extract, process, and sell heavy oil. Having demonstrated pilot
viability, Greenfield has subsequently begun to negotiate marketing
contracts for refining and marketing asphalt, heavy oil and diesel.
The potential future mining operations and extraction processes at
TSHII are also intended to produce various types of sand as
byproducts, and Greenfield has identified markets for the
industrial, construction, fracture stimulation ("frac") and silica
sands.
NSAI estimate the net oil reserves, associated marketable sand
volumes, and future net revenue in respect of the gross (100 per
cent.) interest in the TSHII properties, as of 31 December 2021, in
accordance with PRMS to be:
Net Volumes(1) Future Net
Revenue
(US$ millions)
------------ -----------------
Oil Reserves Marketable Present Worth
Sand(2)
Category (Thousand (Thousand tonnes) Total (US$ millions)
bbls) at 10% discount
rate
Proved (1P) 22,848.3 22,791.2 942.535 304.800
Proved + Probable (2P) 33,636.3 41,221.3 1,733.509 474.821
Proved + Probable +
Possible (3P) 44,322.3 59,790.8 2,533.867 576.267
Notes:
(1) There is no expected gas production in respect of the
project.
(2) Net marketable sand volumes are stated after a 5 per cent.
deduction for fines and losses.
Accordingly, the net oil reserves, associated marketable sand
volumes and future net revenue attributable to TomCo's current 10
per cent. interest in the TSHII properties is as follows:
Net Volumes Future Net
Revenue
(US$ millions)
------------ -----------------
Oil Reserves Marketable Present Worth
Sand
Category (Thousand (Thousand tonnes) Total (US$ millions)
bbls) at 10% discount
rate
Proved (1P) 2,284.83 2,279.12 94.2535 30.4800
Proved + Probable (2P) 3,363.63 4,122.13 173.3509 47.4821
Proved + Probable +
Possible (3P) 4,432.23 5,979.08 253.3867 57.6267
In accordance with the 2018 PRMS definitions and guidelines, one
of the primary requirements for oil and gas volumes to be
classified as reserves is that they be commercially recoverable.
For the purposes of its Report, NSAI evaluated a sensitivity to the
project wherein costs are incurred to dispose of 100 per cent. of
the mined sand volumes rather than including revenue from selling
95 per cent. of it. In this sensitivity, based on the oil prices
and costs assumed (as described further below), the project is
still commercial at the 1P, 2P and 3P levels.
Reserves categorisation conveys the relative degree of
certainty; reserves subcategorisation is based on development and
production status. The 1P volumes are inclusive of proved
undeveloped volumes only. The Report indicates that as of 31
December 2021, there are no developed oil reserves or associated
marketable sand volumes for the TSHII site. For the purposes of the
Report, the volumes and parameters associated with the proved,
proved plus probable, and proved plus probable plus possible
estimate scenarios of reserves are referred to as 1P, 2P and 3P,
respectively. The estimates of oil reserves, associated marketable
sand volumes, and future net revenue included have not been
adjusted for risk. The Report does not include any value that could
be attributed to interests in undeveloped acreage beyond those
tracts for which undeveloped oil reserves and associated marketable
sand volumes have been estimated.
Gross revenue in the Report is the gross (100 per cent.) revenue
from the properties prior to any deductions whereas future net
revenue is after deductions of production taxes, capital costs,
abandonment costs and operating expenses, but before consideration
of any income taxes. The future net revenue has then been
discounted at an annual rate of 10 per cent. to determine its
present worth.
The Report was prepared using oil and marketable sand price
parameters specified by TomCo. The future oil produced and
processed through mining operations is assumed to yield three
distinct products including asphalt, heavy oil, and diesel. The
asphalt price is based on the Argus Asphalt Index price of
US$93.64. Heavy oil and diesel prices are based on the 1 December
2021, West Texas Intermediate posted price of US$62.05 and are
adjusted for quality and market differentials. Sand produced
through mining operations is assumed to be processed and sold as
four distinct products (industrial, construction, frac and silica
sands). Sand prices are based on the 2019 United States Geological
Survey prices for each product.
Operating costs used in the Report are based on the projected
costs of upscaling pilot mining operations provided by TomCo. These
costs include TomCo's estimates of its administrative costs.
Capital costs used in the Report were also provided by TomCo and
are based on the projected costs of upscaling pilot mining
operations. Capital costs were included for the planned
construction of a processing plant, production facilities and
equipment. Based on its understanding of the Company's future
development plans and review of the information provided by TomCo,
NSAI regarded the estimated capital costs to be reasonable.
Abandonment costs used in the Report are TomCo's estimates of the
costs to abandon the future production facilities, net of any
salvage value. None of the costs were escalated for inflation.
Greenfield is engaged in ongoing discussions regarding funding
options to potentially achieve the ultimate acquisition of 100% of
the Membership Interests, whilst progressing other preparatory
work. However, there can be no certainty that Greenfield can secure
the requisite funding for such acquisition.
The full report will shortly be available on the Company's
website.
Enquiries :
TomCo Energy plc
Malcolm Groat (Chairman) / John Potter (CEO) +44 (0)20 3823 3635
Strand Hanson Limited (Nominated Adviser)
James Harris / Matthew Chandler +44 (0)20 7409 3494
Novum Securities Limited (Broker)
Jon Belliss / Colin Rowbury +44 (0)20 7399 9402
IFC Advisory Limited (Financial PR)
Tim Metcalfe / Florence Chandler +44 (0)20 3934 6630
For further information, please visit www.tomcoenergy.com .
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended.
Competent Persons' Statement
The information contained in this announcement that relates to
Reserves in the Duchesne River and Rimrock Sandstones in certain
mining properties located in the Uinta Basin, Utah, United States
is based on information compiled by Mr. Joseph M. Wolfe (Petroleum
Engineer) and Mr. John G. Hattner (Petroleum Geologist), both
employees of Netherland, Sewell & Associates, Inc. Mr. Wolfe
and Mr. Hattner are both Qualified Petroleum Reserves and Resources
Evaluators and are both members of the Society of Petroleum
Engineers and are suitably qualified as Competent Persons as set
out in the June 2009 AIM Note for Mining and Oil & Gas
Companies. Mr. Hattner is also a member of the American Association
of Petroleum Geologists. Mr. Wolfe and Mr. Hattner have reviewed
and have consented to the inclusion of such information in this
report in the form and context in which it appears.
Glossary of Technical Terms
1P Proved Reserves
2P Proved Reserves plus Probable
Reserves
----------------------------------------
3P Proved Reserves plus Probable
Reserves plus Possible Reserves
----------------------------------------
bbls barrels of oil
----------------------------------------
Probable Reserves Those additional Reserves that
analysis of geoscience and engineering
data indicates are less likely
to be recovered than Proved
Reserves but more certain to
be recovered than Possible Reserves
----------------------------------------
Proved Reserves Those quantities of petroleum
that, by analysis of geoscience
and engineering data, can be
estimated with reasonable certainty
to be commercially recoverable
from a given date forward from
known reservoirs and under defined
economic conditions, operating
methods and government regulations
----------------------------------------
Possible Reserves Those additional reserves that
analysis of geoscience and engineering
data indicates are less likely
to be recoverable than Probable
Reserves
----------------------------------------
Reserves Reserves are those quantities
of petroleum anticipated to
be commercially recoverable
by application of development
projects to known accumulations
from a given date forward under
defined conditions
----------------------------------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
DRLDDGDBGSBDGDD
(END) Dow Jones Newswires
January 13, 2022 02:00 ET (07:00 GMT)
Tomco Energy (LSE:TOM)
Historical Stock Chart
From Mar 2024 to Apr 2024
Tomco Energy (LSE:TOM)
Historical Stock Chart
From Apr 2023 to Apr 2024
