CALGARY,
AB, Feb. 27, 2023 /CNW/ - CanAsia Energy Corp.
(TSXV: CEC), on behalf of its 88.2% owned subsidiary Andora Energy
Corporation ("Andora"), is pleased to release the December 31, 2022 Contingent Bitumen Resources
Report ("Resources Report") which is a National Instrument 51-101
compliant resources evaluation for Andora's oil sands interests at
Sawn Lake Alberta, Canada, as evaluated by independent qualified
reserves evaluator Sproule Associates Limited ("Sproule").
The evaluation included all of Andora's Oil Sands Leases at Sawn
Lake based on exploitation using Steam Assisted Gravity Drainage
("SAGD").
Please note that unless otherwise stated, amounts are in
Canadian dollars and volumes and financial amounts are net to
Andora.
Highlights of Sawn Lake, Alberta
Contingent Resources Report as of December
31, 2022
- The Resources Report reflects the development plan for Sawn
Lake Central and Sawn Lake South of
staged development with five standardized "battery scale" SAGD
facilities where growth is primarily funded by cash flow generated
by the project. The SAGD batteries are 5000 to 6000 barrels of
bitumen per day (BOPD) each and utilize Andora's proprietary
Produced Water Boiler ("PWB") technology which uses water from SAGD
production to generate steam and meet water recycle requirements in
Alberta. This strategy
significantly reduces financial, reservoir and operating risk.
- Contingent resources have been assigned to the Sawn Lake
Central and Sawn Lake South blocks
of Sawn Lake. The unrisked "Best Estimate" contingent resources for
Andora are 292.2 million barrels of bitumen recoverable (257.7
million barrels net to CanAsia's 88.2% interest in Andora).
- Andora is the operator of both these blocks and holds a 75%
working interest in the 11 sections of the Central Block, which
have been assigned 214.4 million barrels of unrisked "Best
Estimate" recoverable bitumen (net to Andora's interests) and holds
a 100% working interest in the 16 sections of the South Block,
which have been assigned 77.7 million barrels of unrisked
recoverable bitumen.
- The unrisked "Best Estimate" net present value, discounted at
15%, for Andora's interests is $231
million on an after-tax basis ($204
million net to CanAsia's 88.2% interest in Andora).
- The Resources Report assigned an 85% chance of development for
Sawn Lake, and the risked "Best Estimate" contingent resources for
Andora are 248.3 million barrels of bitumen recoverable (219.0
million barrels net to CanAsia's 88.2% interest in Andora). The
risked "Best Estimate" net present value, discounted at 15%, for
Andora's interests is $198 million on
an after-tax basis ($174 million net
to CanAsia's 88.2% interest in Andora).
- The Resources Report forecasts bitumen production from 2024 to
2086, with maximum unrisked "Best Estimate" production net to
Andora of 20,461 BOPD in 2038.
- The first stage of commercial development is at Sawn Lake
Central Battery #1 (where Andora is operator with a 75% working
interest) to reactivate the existing SAGD facility and wellpair for
restart of bitumen production in in 2024. On a 100% working
interest basis, the estimated capital cost (excluding operating
losses until plateau production is reached) is $3.1 million and plateau production is 620 BOPD.
The second stage of commercial development forecast in 2025 is
drilling of an additional wellpair and facilities work. On a 100%
working interest basis, the estimated capital cost is $10.3 million and plateau production is 1,240
BOPD. The third expansion stage is forecast in 2027 with the
drilling of three more wellpairs plus facilities work, which are
estimated on a 100% working interest basis, at a capital cost of
$37 million to increase production to
2,891 BOPD. Regulatory approval for the Sawn Lake commercial
operation to 3,200 BOPD was received in December 2017.
Resources Report
- The Resources Report evaluated Andora's interests at the Sawn
Lake Alberta oil sands project. Contingent resources are those
quantities of petroleum estimated, as of a given date, to be
potentially recoverable from known accumulations by the application
of development projects, but which are not currently considered to
be commercially recoverable due to one or more contingencies. The
contingent resources volumes estimated in the Sproule report are
considered contingent until such time as there are additional
delineation wells confirming reservoir quality and continuity,
refinement of the commercial development plan, regulatory approval
for full field development, corporate commitment to move forward
and financing for commercial development. Contingent resources are
further classified as "High", "Best" and "Low" in accordance with
the level of certainty.
- Sproule classifies the project evaluation status of the
contingent resource volumes to be at the Development Studies level.
The contingent resource volumes are classified as Development
Pending with respect to project maturity. Sproule evaluated the
Company's development plan for the contingent resources to be
Economically Viable in the aggregate, although there may be
individual locations within the project which may be
uneconomic.
- Contingent resource volumes in the Resources Report have been
assigned an 85% chance of development by Sproule. This chance of
development risk factor is an aggregation of risk factors
attributable to the identified contingencies. There is uncertainty
that it will be commercially viable to produce any portion of the
reported contingent resources volumes.
- The Resources Report identified key positive and negative
factors for development of the Bluesky formation in the Sawn Lake area. Key
positive factors include: the abundance of well data available from
penetrations on and surrounding the Company lands (petrophysical,
geophysical and production history); the presence of successful
analog SAGD projects; and the successful pilot project at the
16-30-91-12W5M location. Key negative factors include: access to
the funding required to develop the resource base; sensitivity to
low commodity pricing which will impact the economics of
development; environmental and regulatory approval for approval of
bitumen development, pipelines and other infrastructure; higher
Alberta or Federal Carbon tax,
income tax or royalties; and market egress.
- The December 31, 2022 Contingent
Resources Report represents an update of a March 31, 2022 Contingent Resources Report which
was also prepared by Sproule. There is no change to the geologic
interpretation, the well type curves, overall forecast bitumen
volumes or the assigned development risk. The December 31, 2022 report has been updated
for:
-
- December 31, 2022 price forecasts
for crude oil, bitumen, natural gas and exchange rates.
- Adjustment of the development stages, estimated commencement of
commercial production in 2024 and operating expenses.
- Updates for Andora tax pools and non-capital loss
carry-forwards to $59.8 million and
the Alberta Oil Sands Royalties Pre-payout Cumulative Costs of
$50.7 million for the Sawn Lake
Project.
- Changes to income tax rates, carbon tax legislation and other
factors.
Sawn Lake SAGD
Development
Andora holds interests in 27 sections (24.25 net sections)
of heavy oilsands leases in Sawn Lake, within the central Alberta
Peace River Oil Sands region. Andora is focused on developing
the bitumen resources at Sawn Lake using SAGD development.
Contingent resources have been assigned to the Sawn Lake Central
and Sawn Lake South where Andora is
the operator.
A SAGD demonstration project at the Sawn Lake Central block
commenced in 2013 and consisted of one SAGD wellpair drilled to a
depth of 650 meters and a horizontal length of 780 meters and a
SAGD facility for steam generation, water handling and bitumen
treating. Steam injection commenced in May 2014 and produced bitumen from September 2014 to February 2016. The
demonstration project reached a steady state production level in
February 2016 of 620 BOPD with an
instantaneous steam-oil ratio ("ISOR") of 2.1. The
demonstration project successfully captured the key data associated
with the objectives of the demonstration project and operations
were suspended at the end of February 2016. The demonstration
project proved that the SAGD process works in the Bluesky formation at Sawn Lake, established
characteristics of ramp up through stabilization of SAGD
performance, indicated the productive capability, ISOR, and
provided critical information required for well and facility design
associated with future commercial development. Production
results to date are not necessarily indicative of long-term
performance or of ultimate recovery and the Sawn Lake demonstration
project has not yet proven that it is commercially viable.
The development plan for Sawn Lake Central and Sawn Lake South is for development in stages
with five standardized "battery scale" SAGD facilities where growth
is primarily funded by net operating income generated by the
project. After tax cash flow in the Sproule evaluation is
Andora's share of revenue less royalty burden, operating expenses,
abandonments, capital expenditures and income tax. The first
phase of commercial expansion at the existing SAGD Battery #1 to
2,891 BOPD is done in three stages with reactivation of the
existing facility and wellpair, the addition of wellpair #2, and
then drilling of an additional three wellpairs and installation
& testing of Andora's PWB. Regulatory approval was
received in December 2017 for
commercial expansion of the existing Sawn Lake Central
demonstration project to 3200 BOPD using Andora's PWB.
Further stages of development include expansion to 5000 BOPD of the
first SAGD battery and then an additional four SAGD batteries which
are located in the best parts of the reservoir. The timing of
individual batteries is dependent on regulatory approval and
after-tax cash flow from existing operations for funding of new
investment. Volume estimates are on a 100% working interest
basis.
It is recognized that stable crude oil prices, and specifically
Western Canada Select benchmark prices, will have a significant
impact on project economics and financing, and on decisions
regarding the timing and extent of future development.
Andora Sawn Lake,
Alberta Interests at December 31, 2022
|
|
Gross
Sections
|
Working
Interest
|
Unrisked Best
Estimate
Contingent Resources -
Company Gross (million
barrels)
|
Central Block (Andora
operated)
|
11
|
75 %
|
214.45
|
South Block (Andora
operated)
|
16
|
100 %
|
77.71
|
|
27
|
|
292.16
|
Summary of Contingent
Bitumen Resources as of December 31, 2022 as provided by
Sproule
|
Marketable Resources -
Company Gross (million barrels)
|
Andora
|
CanAsia
88.2%
|
Risked (evaluation
assigned an 85% chance of development)
|
Contingent - Low Estimate "1C"
|
221.3
|
195.2
|
Contingent - Best Estimate "2C"
|
248.3
|
219.0
|
Contingent - High Estimate "3C"
|
293.3
|
258.7
|
Unrisked
|
|
|
Contingent - Low Estimate "1C"
|
260.3
|
229.6
|
Contingent - Best Estimate "2C"
|
292.2
|
257.7
|
Contingent - High Estimate "3C"
|
345.1
|
304.4
|
Sawn Lake Oil Sands
Project
|
Summary of
Net Present Values as of December 31,
2022
|
Contingent Resources as
provided by Sproule
|
Andora 100% (Cdn$
million)
|
Net Present Values
Before 2Tax (Risked)
|
0 %
|
5 %
|
10 %
|
15 %
|
20 %
|
Contingent - Low Estimate "1C"
|
6,482
|
1,536
|
508
|
209
|
97
|
Contingent - Best Estimate "2C"
|
8,459
|
1,932
|
636
|
264
|
127
|
Contingent - High Estimate "3C"
|
12,171
|
2,482
|
773
|
314
|
150
|
Net Present Values
After Tax (Risked)
|
0 %
|
5 %
|
10 %
|
15 %
|
20 %
|
Contingent - Low Estimate "1C"
|
4,964
|
1,171
|
383
|
154
|
70
|
Contingent - Best Estimate "2C"
|
6,492
|
1,476
|
482
|
198
|
93
|
Contingent - High Estimate "3C"
|
9,356
|
1,901
|
588
|
236
|
112
|
Net Present Values
Before Tax (Unrisked)
|
0 %
|
5 %
|
10 %
|
15 %
|
20 %
|
Contingent - Low Estimate "1C"
|
7,623
|
1,805
|
597
|
245
|
114
|
Contingent - Best Estimate "2C"
|
9,949
|
2,272
|
747
|
310
|
149
|
Contingent - High Estimate "3C"
|
14,316
|
2,919
|
908
|
369
|
176
|
Net Present Values
After Tax (Unrisked)
|
0 %
|
5 %
|
10 %
|
15 %
|
20 %
|
Contingent - Low Estimate "1C"
|
5,836
|
1,374
|
448
|
180
|
81
|
Contingent - Best Estimate "2C"
|
7,634
|
1,734
|
565
|
231
|
108
|
Contingent - High Estimate "3C"
|
11,003
|
2,233
|
689
|
277
|
130
|
1
|
For risked resources
and values, the evaluation assigned an 85% chance of development
for Sawn Lake.
|
2
|
Resources assessed at
forecast crude oil reference prices and costs.
|
3
|
Bitumen production is
forecast to commence in 2024.
|
4
|
The reference prices
for heavy oil per barrel (Western
Canada Select "WCS" 20.5 API in Canadian dollars)
are $89.38 for 2024, $84.06 for 2025, $85.74 for 2026, $87.46 for
2027, $89.21 for 2028, $90.99 for 2029,
$92.81 for 2030 and increase at 2% per year thereafter.
|
5
|
Bitumen revenue per
barrel for these resources is $17.03 less than the
associated WCS reference price in
2024 and the differential increases approximately 1.2% per
year.
|
6
|
The reference prices
for natural gas (AECO-C Spot price per MMBTU in Canadian dollars)
are $4.34 for
2024, $4.00 for 2025, $4.08 for 2026, $4.16 for 2027, $4.24 for
2028, $4.33 for 2029, $4.42 for 2030 and
increase at 2% per year thereafter.
|
7
|
Future development
costs (including inflation of 3% per annum for 2024 and 2% per
annum thereafter) for
Contingent Resources which have been deducted in calculating the
before tax NPV:
|
|
â–ªUnrisked Low Estimate
– CDN$3,576 million with the drilling of 358 gross well pairs and
building facilities
|
|
â–ªUnrisked Best Estimate
– CDN$3,684 million with the drilling of 358 gross well pairs and
building facilities
|
|
â–ªUnrisked High Estimate
– CDN$3,918 million with the drilling of 358 gross well pairs and
building facilities
|
8
|
The values disclosed
may not represent fair market value.
|
9
|
There is uncertainty
that it will be commercially viable to produce any portion of the
resources.
|
|
|
|
|
|
|
|
Sawn Lake Oil Sands
Project
|
Summary of
Net Present Values as of December 31,
2022
|
Contingent Resources as
provided by Sproule
|
CanAsia 88.2%
Interest in Andora (Cdn$ million)
|
|
Net Present Values
Before Tax (Risked)
|
0 %
|
5 %
|
10 %
|
15 %
|
20 %
|
Contingent - Low Estimate "1C"
|
5,717
|
1,355
|
448
|
184
|
86
|
Contingent - Best Estimate "2C"
|
7,461
|
1,704
|
561
|
233
|
112
|
Contingent - High Estimate "3C"
|
10,735
|
2,189
|
681
|
277
|
132
|
Net Present Values
After Tax (Risked)
|
0 %
|
5 %
|
10 %
|
15 %
|
20 %
|
Contingent - Low Estimate "1C"
|
4,379
|
1,033
|
338
|
136
|
62
|
Contingent - Best Estimate "2C"
|
5,726
|
1,302
|
425
|
174
|
82
|
Contingent - High Estimate "3C"
|
8,252
|
1,676
|
518
|
209
|
98
|
Net Present Values
Before Tax (Unrisked)
|
0 %
|
5 %
|
10 %
|
15 %
|
20 %
|
Contingent - Low Estimate "1C"
|
6,724
|
1,592
|
526
|
216
|
100
|
Contingent - Best Estimate "2C"
|
8,775
|
2,004
|
659
|
274
|
131
|
Contingent - High Estimate "3C"
|
12,627
|
2,574
|
801
|
325
|
155
|
Net Present Values
After Tax (Unrisked)
|
0 %
|
5 %
|
10 %
|
15 %
|
20 %
|
Contingent - Low Estimate "1C"
|
5,147
|
1,212
|
395
|
159
|
72
|
Contingent - Best Estimate "2C"
|
6,733
|
1,529
|
498
|
204
|
96
|
Contingent - High Estimate "3C"
|
9,704
|
1,970
|
608
|
244
|
115
|
1
|
Results represent
CanAsia's 88.2% interest in Andora.
|
2
|
For risked resources
and values, the evaluation assigned an 85% chance of development
for Sawn Lake.
|
3
|
Resources assessed at
forecast crude oil reference prices and costs.
|
4
|
Bitumen production is
forecast to commence in 2024.
|
5
|
The reference prices
for heavy oil per barrel (Western
Canada Select "WCS" 20.5 API in Canadian dollars)
are $89.38 for 2024, $84.06 for 2025, $85.74 for 2026, $87.46 for
2027, $89.21 for 2028, $90.99 for 2029,
$92.81 for 2030 and increase at 2% per year
thereafter.
|
6
|
Bitumen revenue per
barrel for these resources is $17.03 less than the
associated WCS reference price in
2024 and the differential increases approximately 1.2% per
year.
|
7
|
The reference prices
for natural gas (AECO-C Spot price per MMBTU in Canadian dollars)
are $4.34 for 2024,
$4.00 for 2025, $4.08 for 2026, $4.16 for 2027, $4.24 for 2028,
$4.33 for 2029, $4.42 for 2030 and increase at
2% per year thereafter.
|
8
|
Future development
costs (including inflation of 0% per annum for 2024 and 2% per
annum thereafter) for
Contingent Resources which have been deducted in calculating the
before tax NPV:
|
|
â–ªUnrisked Low Estimate
– CDN$3,154 million with the drilling of 358 gross well pairs and
building facilities
|
|
â–ªUnrisked Best Estimate
– CDN$3,249 million with the drilling of 358 gross well pairs and
building facilities
|
|
â–ªUnrisked High Estimate
– CDN$3,456 million with the drilling of 358 gross well pairs and
building facilities
|
9
|
The values disclosed
may not represent fair market value.
|
10
|
There is uncertainty
that it will be commercially viable to produce any portion of the
resources.
|
|
|
|
|
|
|
|
|
CanAsia is a Calgary,
Alberta based oil and gas company with operations in
Western Canada.
This press release contains forward-looking
information. Forward-looking information is generally
identifiable by the terminology used, such as "expect", "believe",
"estimate", "should", "anticipate" and "potential" or other similar
wording. Forward-looking information in this press release
includes references, express or. By its very nature, the
forward-looking information contained in this press release
requires CanAsia and its management to make assumptions that may
not materialize or that may not be accurate. In addition, the
forward-looking information is subject to known and unknown risks
and uncertainties and other factors, some of which are beyond the
control of CanAsia, which could cause actual results, expectations,
achievements or performance to differ materially. Although
CanAsia believes that the expectations reflected in its
forward-looking information are reasonable, it can give no
assurances that those expectations will prove to be correct.
CanAsia undertakes no obligation to update publicly or revise any
forward-looking information, whether as a result of new
information, future events or otherwise, except as required by
applicable securities laws.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE CanAsia Energy Corp.