CALGARY, March 7, 2018 /CNW/ – Marquee Energy Ltd. (“Marquee” or the “Company”) (TSXV: “MQX”) is pleased to report its reserve evaluation for the year ended December 31, 2017, as well as provide an update on its first quarter drilling and completion operations.
RESERVE HIGHLIGHTS
- Total proved developed producing (“PDP”) reserves increased 9% to 5.3 mmboe;
- PDP reserves valuation discounted at 10% before tax was $67 million, which represents a 22% increase over year-end 2016. The PDP reserves valuation discounted at 10% before tax is $0.15 per basic share;
- Total proved (“TP”) and total proved plus probable (“TPP”) reserves increased 15% and 28% to 13.9 mmboe and 22.6 mmboe respectively year over year;
- Booked undeveloped drilling locations increased to 110 (65 proven and 45 probable);
- Reserves replacement ratio on a PDP, TP and TPP basis was 143%, 276% and 588%, respectively; and
- Sproule’s evaluation included a 30% increase to the Michichi Banff type curve over year-end 2016, increasing to 200 mboe from 154 mboe, both 65% oil and liquids.
OPERATIONAL UPDATE
- The two third quarter 2017 exploration wells, drilled to the west of the Company’s core Michichi Banff fairway, have each averaged 45 barrels of oil per day (“bbl/d”) over the last 30 days;
- The first well in Marquee’s first quarter 2018 program was successfully fractured with 28 stages, and brought on production in mid-January. Initial production for the first 30 days (“IP30”) averaged 203 boe/d (81% oil and liquids, 19% gas); and
- The remaining four wells of the first quarter 2018 program have been drilled. Completions and tie-in operations are anticipated to be completed by month end, with post cleanup production results expected by late April. Each of these wells will also receive 28 fracture stages.
2017 YEAR-END RESERVES
Sproule Associates Limited (“Sproule”) evaluated Marquee’s properties effective December 31, 2017, pursuant to a report dated March 7, 2018. The independent reserve evaluation has been prepared in accordance with NI 51-101 and the Canadian Oil and Gas Evaluation Handbook. Additional reserves information required under NI 51-101 will be included in Marquee’s Annual Information Form to be filed on SEDAR in April 2018.
Sproule based their evaluation on the Sproule price forecast, dated December 31, 2017. The Reserves Committee of the Board, and the Board of Directors of Marquee have reviewed and approved the Sproule report.
Sproule Price Forecast Year over Year Comparison – 2017 vs. 2016
|
WTI Cushing |
2017 vs |
Exchange Rate |
2017 vs |
AECO – C Spot |
2017 vs |
|||||
|
Forecast Year |
2017 |
2016 |
% |
2017 |
2016 |
% |
2017 |
2016 |
% |
|
|
2017 Historical |
50.95 |
55.00 |
-7% |
0.77 |
0.78 |
-1% |
2.09 |
3.26 |
-35% |
|
|
2018 Forecast |
55.00 |
65.00 |
-15% |
0.79 |
0.82 |
-4% |
2.70 |
3.10 |
-13% |
|
|
2019 Forecast |
65.00 |
70.00 |
-7% |
0.82 |
0.85 |
-4% |
2.95 |
3.05 |
-3% |
|
|
2020 Forecast |
70.00 |
71.40 |
-2% |
0.85 |
0.85 |
0% |
3.46 |
3.70 |
-6% |
|
|
2021 Forecast |
73.00 |
72.83 |
0% |
0.85 |
0.85 |
0% |
3.60 |
3.79 |
-5% |
|
|
2022 Forecast |
74.46 |
74.28 |
0% |
0.85 |
0.85 |
0% |
3.75 |
3.88 |
-3% |
|
Gross Company Reserves (1,2) As at December 31, 2017
Description |
Light Crude Oil |
Conventional |
Natural Gas (Mbbl) |
Total (Mboe) |
Proved producing |
2,376 |
15,807 |
260 |
5,270 |
Proved non-producing |
86 |
415 |
9 |
164 |
Proved undeveloped |
5,600 |
15,145 |
357 |
8,481 |
Total proved |
8,062 |
31,367 |
625 |
13,915 |
Probable |
5,366 |
17,885 |
381 |
8,728 |
Total proved plus probable |
13,428 |
49,251 |
1,006 |
22,643 |
(1) |
Based on Sproule December 31, 2017 forecast prices |
(2) |
Gross Company reserves are the Company’s total working interest share before the deduction of royalties. |
Summary of Before Tax Net Present Values, as at December 31, 2017(1)
|
Description |
Before Tax Net Present Value of Future Revenue ($M) |
|||||
|
Discount Rate |
||||||
|
0% |
5% |
10% |
15% |
20% |
||
|
Proved producing |
$98,321 |
$80,085 |
$66,995 |
$57,512 |
$50,446 |
|
|
Proved non-producing |
$8,351 |
$5,736 |
$4,006 |
$2,816 |
$1,971 |
|
|
Proved undeveloped |
$179,051 |
$121,018 |
$82,800 |
$57,557 |
$40,331 |
|
|
Total proved |
$285,722 |
$206,839 |
$153,801 |
$117,885 |
$92,748 |
|
|
Probable |
$220,978 |
$150,839 |
$108,444 |
$81,356 |
$63,134 |
|
|
Total proved plus probable |
$506,700 |
$357,678 |
$262,246 |
$199,241 |
$155,882 |
|
|
Per Basic Share |
$1.16 |
$0.82 |
$0.60 |
$0.46 |
$0.36 |
|
(1) |
Based on Sproule December 31, 2017 forecast prices. |
(2) |
Benchmark commodity prices used are adjusted for the quality of the commodities produced and for transportation costs. The calculated NPVs include a deduction for estimated future well abandonment and reclamation but do not include a provision for interest, debt service charges and general and administrative expenses. It should not be assumed that the NPV estimates represent the fair market value of the reserves. |
Reconciliation of Reserves – Gross company interest (1)
|
6:1 Oil Equivalent (mboe) |
||||
|
Gross Company |
Probable |
Total Proved plus |
||
|
December 31, 2016 |
12,126 |
5,555 |
17,681 |
|
|
Extensions |
82 |
19 |
101 |
|
|
Infill Drilling |
1,341 |
1,285 |
2,626 |
|
|
Technical Revisions |
1,390 |
1,851 |
3,241 |
|
|
Economic Factors (2) |
-8 |
19 |
11 |
|
|
Production |
-1,017 |
0 |
-1,017 |
|
|
December 31, 2017 |
13,915 |
8,728 |
22,643 |
|
(1) |
Company Gross Reserves means the Company’s working interest reserves before calculation of royalties, and before consideration of the Company’s royalty interests. |
(2) |
Economic Factors include changes due to price forecast and royalties (year over year changes in reserves caused by price forecast adjustments). |
Finding, Development and Acquisition Costs
Historical Finding and Development (“F&D”) and Finding, Development and Acquisition (“FD&A”) costs are reported below for 2016 and 2017. F&D costs for pre-2016 are nil, as Marquee, then known as Alberta Oilsands Inc. (“AOS”), sold its reserves in 2012 and did not have any reserves until December 2016. The following table summarizes the Company’s post merger Finding, Development and Acquisition costs including changes in Future Development Costs:
|
Finding, Development and |
2017 |
2016(1) |
||||||
|
Total Proved |
Total P+P |
Total Proved |
Total P+P |
|||||
|
Exploration costs in the year |
4,777,449 |
4,777,449 |
37,071 |
37,071 |
||||
|
Development costs in the year |
15,804,507 |
15,804,507 |
259,240 |
259,240 |
||||
|
Less cap G&A |
(751,437) |
(751,437) |
(45,360) |
(45,360) |
||||
|
Acquisitions(2) |
– |
– |
29,621,323) |
29,621,323 |
||||
|
Change in FDC |
17,354,500 |
67,933,100 |
– |
– |
||||
|
Total attributable costs |
37,185,019 |
87,763,619 |
29,872,274 |
29,872,274 |
||||
|
Change in reserves (mboe) |
2,806.0 |
5,979.1 |
12,187.8 |
17,742.9 |
||||
|
FD&A costs per boe(3) |
$ |
13.25 |
$ |
14.68 |
$ |
2.45 |
$ |
1.68 |
(1) |
Marquee incurred minimal capital cost post the December 6, 2016 amalgamation with Alberta Oilsands Inc. (“AOS”). |
(2) |
2016 acquisitions comprised mainly of the Costs related to acquisition of Marquee reserves by AOS. |
(3) |
See the “Oil and Gas Advisories” section at the end of this press release for information pertaining to these oil and gas metrics. |
|
Finding and Development Costs ($) |
2017 |
2016(1) |
||||
|
Total Proved |
Total P+P |
Total Proved |
Total P+P |
|||
|
Exploration costs in the year |
4,777,449 |
4,777,449 |
37,071 |
37,071 |
||
|
Development costs in the year |
15,804,507 |
15,804,507 |
259,240 |
259,240 |
||
|
Less cap G&A |
(751,437) |
(751,437) |
(45,360) |
(45,360) |
||
|
Acquisitions |
– |
– |
– |
– |
||
|
Change in FDC |
17,354,500 |
67,933,100 |
– |
– |
||
|
Total attributable costs |
37,185,019 |
87,763,619 |
250,951 |
250,951 |
||
|
Change in reserves(2) |
2,806.0 |
5,979.1 |
– |
– |
||
|
F&D costs per boe(3) |
$ |
13.25 |
$ |
14.68 |
N/A |
N/A |
(1) |
Marquee incurred minimal capital cost post the December 6, 2016 amalgamation with AOS. |
(2) |
All reserves in 2016 were attributed to the acquisition of Marquee reserves by AOS. |
(3) |
See the “Oil and Gas Advisories” section at the end of this press release for information pertaining to these oil and gas metrics. |
OPERATIONS UPDATE
Marquee’s capital budget for the first half of 2018 includes drilling and completing five 100% working interest Banff horizontal development wells at Michichi, Alberta. These wells are designed to expand on the completion techniques implemented successfully in the third quarter of 2017. At that time, interstage fracture spacing was reduced from the historical average of 100 metres to 65 metres. Fracture spacing was further reduced to approximately 50 metres for each of the new first quarter drills. Management believes increasing fracture density will increase well productivity.
As of the date of this press release, all five planned first quarter wells have been successfully drilled using monobore technology in an average spud-to-rig-release time of nine days. The first location (102/03-29-31-17W4) was successfully completed in early January 2018 with 29 fracture stages and was brought on production during the third week of January 2018. Over the first 30 days of production, the well has produced at an average of 203 boe/d, consisting of 165 barrels of oil and liquids per day (“bbls/d”) and 210 thousand cubic feet of natural gas per day (mcf/d).
The remaining four wells are scheduled to be completed by mid-March, with on-production dates anticipated prior to the end of March 2018. Post the fracture water cleanup period, Marquee anticipates releasing well results four to six weeks after the wells have been brought on production.
Marquee owns a large, contiguous, proven resource play at Michichi, delineated with significant vertical well control and trade 3D seismic. To date, a total of 40 sand fractured Banff horizontal wells have been drilled in the core Michichi fairway, where management believes it can achieve predicable and repeatable well results on a program average basis. Combining the geologic data with the ample horizontal production information, Marquee has used its technical expertise to delineate the asset into a development ready, Southern Alberta light oil play with 281 (net) internally identified drilling locations. Please see the “oil and Gas Advisories” section for a description of these drilling locations.
In the third quarter of 2017, the Company drilled two exploration wells to test for the existence of a prospective fairway to the west of the current development block at Michichi. The wells also satisfied flow-through commitments related to Canadian exploration expenses (CEE). Both wells encountered oil pay throughout their 1,400-metre long horizontal sections and have been producing since November 2017. Over the last 30 days, the 15-25-32-18 W4 well averaged 57 mcf/d of gas and 51 bbl/d of oil. Over the same time period, the 14-34-31-17 W4 well has averaged 67 mcf/d of gas and 37 bbl/d of oil. Management will continue to evaluate the technical aspects of this emerging play, while focusing near term capital allocation on the core Banff development fairway at Michichi.
CORPORATE PRESENTATION AND RELEASE OF YEAR-END AUDITED RESULTS
Marquee’s updated corporate presentation will be available shortly at www.marquee-energy.com. The Company expects to release fiscal year-end audited results on or about April 12, 2018.
ABOUT MARQUEE
Marquee is a Calgary-based, junior energy Company focused on light oil development and production in the Michichi area of eastern Alberta. Marquee’s shares trade on the TSX Venture Exchange under the trading symbol “MQX”. Additional information about Marquee may be found on its website www.marquee-energy.com and in its continuous disclosure documents filed with Canadian securities regulators on SEDAR at www.sedar.com.
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