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Seaview Energy Inc. (TSX VENTURE:CVU.A) (TSX VENTURE:CVU.B) ("Seaview" or the
"Company") is pleased to provide an update on the Company's corporate
developments.
In the Company's first 10 months of operations, Seaview has enjoyed significant
early success in executing its balanced strategy of acquiring, exploiting and
exploring for high quality natural gas and light oil assets in Western Canada.
Through a combination of four strategic acquisitions and early exploration
success, management has established Seaview as an emerging high-growth, junior
exploration and production company.
The Company is pleased to report that with the acquisition of the light oil
properties in Southeast Saskatchewan, which closed on June 26, 2008, the
acquisition of C3 Resources Ltd., which closed on July 24, 2008, and the
Company's ongoing successful drilling program, the reserves evaluation of
Seaview's reserves, has increased materially relative to the year end December
31, 2007 results.
The independent reserves evaluation was completed by Sproule and Associates
Limited ("Spoule") with an effective date of June 30, 2008, in a National
Instrument 51-101 ("NI 51-101") compliant report entitled "Evaluation of the
P&NG Reserves of Seaview Energy Inc."
- Total Proven reserves have increased by 899% (304% per share) since December
31, 2007 to 4,104 Mboe.
- Total Proven plus Probable reserves increased by 710% (227% per share) during
the same period to 5,733 Mboe.
- Net asset value of $2.68 per Class A share of Seaview, using a before tax 10%
discount rate increased 114% relative to December 31, 2007.
RESERVES
Seaview has a reserves committee comprised of independent board members, which
reviews the qualifications and appointment of the independent reserve
evaluators. The Committee also reviews the processes and technical data used to
determine the reserves booked.
The Company has filed its Annual Information Form which includes Seaview's
reserves data and other oil and gas information for the year ended December 31,
2007 as mandated by National Instrument 51-101 Standards for Disclosure for Oil
and Gas Activities of the Canadian Securities Administrators.
Subsequent to year end, the Company has successfully closed four acquisitions
and completed a successful drilling program in the first half of 2008. As a
result, the reserves and value of the Company have changed relative to year end
and the following update is provided to account for the increases from year end
2007.
The June 30, 2008, evaluation was prepared by Sproule utilizing the methodology
and definitions as set NI 51-101. The reserves presented herein include the
total Company's working interest reserves (Gross Reserves) before deduction of
royalties and exclude royalty interest reserves as at June 30, 2008.
The pricing sensitivity report used the following pricing, exchange rate and
inflation rate assumptions as of June 30, 2008 in estimating Seaview's reserves
data using forecast prices and costs.
Table 1 NI 51-101
Summary of Oil and Gas Reserves
as of June 30, 2008
Forecast Prices and Costs
Gross Reserves Net Reserves
----------------------------- ------------------------------
Light Light
and and
Medium Natural Medium Natural
Crude Heavy Gas Natural Crude Heavy Gas Natural
Oil Crude Liquids Gas Oil Crude Liquids Gas
------- ----- ------- -------- ------ ----- ------- --------
Mbbls Mbbls Mbbls Mmcf Mbbls Mbbls Mbbls Mmcf
------- ----- ------- -------- ------ ----- ------- --------
Proved
Developed 893.2 0 54.0 15,915 787.7 0 38.8 12,247
Producing
Developed 151.7 0 1.2 1,142 140.6 0 0.8 915
Non-Producing
Undeveloped 54.0 0 0.9 634 47.5 0 0.6 456
Total Proved 1,098.9 0 56.1 17,692 975.8 0 40.3 13,798
Probable 432.1 0 17.4 7,076 382.6 0 12.6 5,572
Total Proved
plus Probable 1,531.0 0 73.5 24,768 1,358.4 0 52.8 19,370
Table 2 NI 51-101
Summary of Net Present Values of Future Net Revenue
as of June 30, 2008
Forecast Prices and Costs
Unit Value
Before
Income Tax
Before Future Income Tax Expenses Discounted
and Discounted at at
--------------------------------------------- -----------
0% 5% 10% 15% 20% 10%/year
--------- -------- -------- -------- -------- -----------
(M$) (M$) (M$) (M$) (M$) ($/boe)
--------- -------- -------- -------- -------- -----------
Proved
Developed Producing 148,318 116,386 97,949 85,798 77,077 33.80
Developed
Non-Producing 13,845 11,804 10,313 9,185 8,303 35.09
Undeveloped 6,919 5,841 5,056 4,462 3,997 40.74
Total Proved 169,082 134,031 113,318 94,445 89,377 34.18
Probable 66,614 42,192 30,936 24,507 20,355 23.37
Total Proved plus
Probable 235,696 176,223 144,255 123,952 109,733 31.09
After Future Income Tax Expenses
and Discounted at
---------------------------------------------
0% 5% 10% 15% 20%
--------- -------- -------- -------- --------
(M$) (M$) (M$) (M$) (M$)
--------- -------- -------- -------- --------
Proved
Developed Producing 119,796 94,545 79,941 70,303 63,380
Developed
Non-Producing 9,870 8,377 7,286 6,459 5,813
Undeveloped 5,019 4,196 3,598 3,147 2,796
Total Proved 134,685 107,118 90,825 79,910 71,989
Probable 48,902 30,775 22,413 17,634 14,550
Total Proved plus
Probable 183,587 137,893 113,238 97,544 86,450
Table 3 NI 51-101
Total Future Net Revenue Undiscounted
as of June 30, 2008
Forecast Prices and Costs
Operating Development
Revenue Royalties Costs Costs
-----------------------------------------------------------
(M$) (M$) (M$) (M$)
-----------------------------------------------------------
Total Proved 306,099 54,469 74,583 1,856
Reserves
Total Proved 431,012 75,539 108,059 4,255
plus Probable
Future Net
Revenue
Abandonment and Before Future Net
Reclamation Income Income Revenue After
Costs Taxes Taxes Income Taxes
-----------------------------------------------------------
(M$) (M$) (M$) (M$)
-----------------------------------------------------------
Total Proved 6,109 169,082 34,397 134,685
Reserves
Total Proved 7,462 235,696 52,109 183,587
plus Probable
Table 4 NI 51-101
Net Present Value of Future Net Revenue
By Production Group
as of June 30, 2008
Forecast Prices and Costs
Future Net
Revenue Before Unit Value Before
Income Taxes Income Taxes
and (Discounted (Discounted at
at 10%/Year) 10%/Year)
----------------- -------------------
(M$) ($/boe)
----------------- -------------------
Proved
Light and Medium Crude Oil 44,157 41.51
(including solution gas and
associated by-products)
Heavy Crude Oil 0 0
(including solution gas and
associated by-products)
Natural Gas 69,161 30.71
(including associated by products)
Proved plus Probable
Light and Medium Crude Oil 58,904 39.54
(including solution gas and
associated by-products)
Heavy Crude Oil 0 0
(including solution gas and
associated by-products)
Natural Gas 85,351 27.10
(including associated by products)
Table 5 NI 51-101
Summary of Pricing and Inflation Rate Assumptions
as at June 30, 2008 - Forecast Prices and Costs
The Reserves Report used the following pricing, exchange rate and inflation
rate assumptions as of June 30, 2008 in estimating Seaview's reserves data
using forecast prices and costs.
NATURAL
CRUDE OIL GAS
-------------------------------------------------- -------------
Edmonton Cromer
WTI Par Price Medium Alberta
Crude 40 Degrees API 29.3 Degrees API AECO Gas
Year Oil Crude Oil Crude Oil Price
----- ---------- ---------------- ------------------ -------------
($US/Bbl) ($Cdn/Bbl) ($Cdn/Bbl) ($Cdn/mmbtu)
---------- ---------------- ------------------ -------------
(1) (2) (3)
---------- ---------------- ------------------
Forecast
2008 132.01 130.59 114.92 11.87
2009 131.09 129.66 114.10 10.77
2010 129.78 128.32 112.92 9.63
2011 109.86 108.39 95.38 8.95
2012 92.01 90.51 79.65 8.69
Thereafter Various Escalation Rates
NATURAL GAS
LIQUIDS
-------------------------------
Pentanes Butanes
Plus FOB US/CAN
FOB Field Field Exchange
Year Gate Gate Inflation Rate
---------------------------------- ---------- ------------ ----------
($Cdn/Bbl) ($Cdn/Bbl) (%) ($US/Cdn)
------------- ---------- ------------ ----------
Forecast
2008 133.75 102.20 2.5 1.000
2009 132.79 96.64 5.0 1.000
2010 131.42 95.64 4.0 1.000
2011 111.00 80.79 3.0 1.000
2012 92.69 67.46 2.0 1.000
Thereafter Various Escalation Rates
Notes:
(1) West Texas Intermediate at Cushing Oklahoma 40 degrees API, 0.5%
sulphur
(2) Edmonton Light Sweet 40 degrees API, 0.3% sulphur
(3) Comer Medium (29.3 degrees API Heavy stream)
Net Asset Value per Share Information
Based on Sproule Reserves Evaluation as at June 30, 2008
----------------------------------------------------------------------------
($M except share amounts) Before Tax Before Tax
5% Discount 10% Discount
----------------------------------------------------------------------------
Value of Total Proven plus Probable Reserves 176,223 144,255
Undeveloped Land (24,008 acres at $150 per acre) 3,601 3,601
Estimated Proforma Net Debt as at June 30, 2008 (21,900) (21,900)
----------------------------------------------------------------------------
Total Net Assets 157,924 125,956
Class A shares Outstanding (MM) as at
September 29, 2008 47.0 47.0
Estimated Net Asset Value per Class A share $3.36 $2.68
----------------------------------------------------------------------------
SENSITIVITY TO COMMODITY PRICE ASSUMPTIONS
Sproule has provided the Company with a sensitivity analysis using its
September 1, 2008 commodity price forecast. With this lower price forecast
the estimated value of the Total Proven plus Probable Reserves is reduced by
11.7% to $127.4 million dollars using before tax 10% discount rate with an
effective date of June 30, 2008.
Accordingly the estimated net asset value per Class "A" share of Seaview is
reduced 12.3% to $2.32 per share at the revised pricing assumptions. For
comparison purposes, the price assumptions used in the revised sensitivity
runs are as follows:
Summary of Pricing and Inflation Rate Assumptions as at August 31, 2008 -
Forecast Prices and Costs (NTD: Sproule to provide)
The pricing sensitivity report used the following pricing, exchange rate and
inflation rate assumptions as of June 30, 2008 in estimating Seaview's
reserves data using forecast prices and costs.
CRUDE OIL
------------------------------------------
Edmonton Cromer
Par Price Medium
WTI 40 Degrees 29.3 Degrees
Crude API API
Year Oil Crude Oil Crude Oil
----- ---------- ------------ -------------
($US/Bbl) ($Cdn/Bbl) ($Cdn/Bbl)
---------- ------------ -------------
(1) (2) (3)
---------- ------------ -------------
Forecast
2008 119.31 117.90 103.75
2009 119.85 118.41 104.20
2010 118.31 116.85 102.83
2011 108.25 106.77 93.96
2012 92.01 90.51 79.65
Thereafter Various Escalation Rates
NATURAL NATURAL GAS
GAS LIQUIDS
------------- ----------------------
Pentanes Butanes
Alberta Plus FOB US/CAN
AECO Gas FOB Field Field Exchange
Year Price Gate Gate Inflation Rate
----- ------------- ----------- --------- ---------- ---------
($Cdn/mmbtu) ($Cdn/Bbl) ($Cdn/Bbl) (%)($US/Cdn)
----- ------------- ----------- --------- ---------- ---------
Forecast
2008 7.70 120.75 92.27 2.5 1.000
2009 8.22 121.27 88.26 5.0 1.000
2010 8.23 119.67 87.09 4.0 1.000
2011 8.14 109.35 79.58 3.0 1.000
2012 8.69 92.69 67.46 2.0 1.000
Thereafter Various Escalation Rates
Notes:
(1) West Texas Intermediate at Cushing Oklahoma 40 degrees API, 0.5% sulphur
(2) Edmonton Light Sweet 40 degrees API, 0.3% sulphur (3) Comer Medium
(29.3 ae degrees API Heavy stream)
OUTLOOK; 2008 GUIDANCE
Seaview's management team has aggressively positioned the Company for solid
future growth per share through the successful execution of the Company's
business strategy. With the execution of three strategic corporate acquisitions
and one property acquisition, combined with a very successful 2008 drilling
program, Seaview has the following corporate characteristics:
-Total Proven reserves of 4,104 Mboe, and Total Proven plus Probable reserves of
5,733 Mboe, effective June 30, 2008, as evaluated by Sproule utilizing NI 51-101
reserve definitions.
- Reserve life index of 10.1 years based on Total Proven plus Probable reserves
and the Company's December 2008 exit production rate of 1,550 boe/d.
- Total Proven reserves value of $113.3 million, based on before tax net present
value at a 10% discount rate ("BTAX NPV10%"). Total Proven plus Probable
reserves value of $144.3 million at BTAX NPV10%.
- Net asset value of $3.36 and $2.68 per Class A share, using a BTAX 5% and 10%
discount rate respectively, including value of undeveloped land.
- Forecasted 2008 average daily production estimate of more than 1050 Boe/d, and
2008 production exit rate target of more than 1,550 Boe/d.
- Expanding land position of 116,916 gross acres (48,143 net acres), including
24,008 net acres of undeveloped lands.
- Extensive drilling inventory of more than 90 locations, including over 70
prospects targeting multi-zone conventional targets and an expanding inventory
of light oil prospects in Southeast Saskatchewan.
- Seaview's prospect inventory is not currently reflected in the Company's
independent reserve evaluation and therefore provides for significant long-term
growth potential.
- Exposure to Montney resource play in Pouce Coupe with 3.9 net sections of land
in this exciting Montney tight gas play. Seaview is currently participating in
drilling the Company's first horizontal test with potentially 16 net horizontal
follow-up locations.
- Forecast debt to fourth quarter annualized cash flow ratio of 1.0 times.
- Seaview's available bank line is currently $34 million.
- 47.1 million Class A shares and 1.054 million Class B shares outstanding.
Seaview is a Calgary, Alberta based company engaged in the exploration,
development and production of conventional crude oil and natural gas reserves in
Canada. Seaview's strategy is to build shareholder value through a balance of
exploration and development drilling complemented by a focused acquisition
program.
Barrels of oil equivalent (boe) may be misleading, particularly if used in
isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural
gas to one barrel (bbl) of oil is based on an energy conversion method primarily
applicable at the burner tip and is not intended to represent a value
equivalency at the wellhead. All boe conversions in this press release are
derived by converting natural gas to oil in the ratio of six thousand cubic feet
of natural gas to one barrel of oil. Certain financial amounts are presented on
a per boe basis, such measurements may not be consistent with those used by
other companies.
This press release may contain forward-looking statements within the meaning of
applicable securities laws. Forward-looking statements may include estimates,
plans, anticipations, expectations, opinions, forecasts, projections, guidance
or other similar statements that are not statements of fact. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to be correct. These statements are subject to certain risks and
uncertainties and may be based on assumptions that could cause actual results to
differ materially from those anticipated or implied in the forward-looking
statements. These risks include, but are not limited to: the risks associated
with the oil and gas industry (e.g. operational risks in development,
exploration and production; delays or 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 fluctuation and uncertainties resulting from
potential delays or changes in plans with respect to exploration or development
projects or capital expenditures. The Company's forward-looking statements are
expressly qualified in their entirety by this cautionary statement. The
forward-looking statements contained in this press release are made as of the
date hereof and the Company undertakes no obligations 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.
The estimated values disclosed in this press release do not represent fair
market values.