Twoco Petroleums Ltd. Reserves Update
March 14 2012 - 5:27PM
Marketwired Canada
Twoco Petroleums Ltd. ("Twoco" or the "Company") (TSX VENTURE:TWO) is pleased to
announce an increase of 104% in its overall oil and natural gas reserve base
from December 31, 2010 to December 31, 2011, as evaluated by Sproule Associates
Limited ("Sproule") in accordance with National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities ("NI 51-101"). Twoco was able to
significantly increase its overall oil and natural gas reserve base, on a year
over year basis, as a result of heavy oil reserves assigned following the
successful drilling of three (3) gross (2.9 net) multi-leg horizontal oil wells
on its heavy oil property in the Warspite area of Alberta. This increase in
reserve base is despite a decline in its natural gas reserves in 2011 due to a
lack of natural gas directed drilling, natural declines in production volumes
and reductions associated with a lower natural gas price forecast. Total Proved
plus Probable heavy oil reserves of 3,442,700 barrels represents a 718% increase
from the December 31, 2010 corporate reserve evaluation of the Company's Sparky
heavy oil property in the Warspite area. The reserves increase is the result of
the Company's successful implementation of its plan to strategically diversify
its commodity mix by targeting exploration towards oil prospects it has
identified on its existing lands. Twoco's oil reserves now represent 96% of its
overall reserves value.
A summary of the Company's reserves volumes according to reserve category as at
December 31, 2011 is as provided in the following table. Unless otherwise
stated, the reserves information included in this news release is stated on a
"company interest" basis, which represents Twoco's working interest (operated
and non-operated) share of remaining reserves before deduction of royalties and
including any royalty interests. Numbers presented in table may not add exactly
due to rounding.
Light and Heavy Solution Natural Total Oil
Medium Oil Oil Gas Gas Equivalent
Reserves Category (Mbbl) (Mbbl) (MMcf) (MMcf) (Mboe)
----------------------------------------------------------------------------
Proved
Producing 0 264.6 300 1,528 569.2
Non-Producing 0 0 0 402 67.0
Undeveloped 0 966.3 1,151 0 1,158.2
----------------------------------------------------------------------------
Total Proved 0 1,230.9 1,451 1,930 1,794.4
Probable 0 2,211.8 3,481 1,174 2,987.6
----------------------------------------------------------------------------
Total Proved plus Probable 0 3,442.7 4,932 3,104 4,782.0
A summary of the Company's estimated future net revenues associated with Twoco's
reserves as at December 31, 2011 based on the Sproule December 31, 2011 price
forecast is provided in the following table. It should not be assumed that the
net present values estimated by Sproule represent the fair market value of the
reserves. Numbers presented in table may not add exactly due to rounding.
Before Income Taxes Discounted at (%/year)
0% 5% 10% 15% 20%
Reserves Category (M$) (M$) (M$) (M$) (M$)
----------------------------------------------------------------------------
Proved
Producing 17,139 14,643 12,890 11,605 10,622
Non-Producing 433 377 331 292 260
Undeveloped 39,743 30,768 24,675 20,307 17,033
----------------------------------------------------------------------------
Total Proved 57,315 45,788 37,896 32,204 27,916
Probable 111,780 78,663 59,138 46,486 37,676
----------------------------------------------------------------------------
Total Proved plus Probable 169,095 124,450 97,035 78,690 65,591
Twoco's current Net Asset Value before income tax is estimated, using a 10%
discount rate, to be $1.11/share on a basic outstanding share basis (72,167,294
common shares) and $0.82/share on a fully diluted share basis (104,843,283
common shares) which were both calculated on a Total Proved plus Probable basis.
Relevant portions of the Sproule December 31, 2011 price forecast used in the
Company's evaluation are as follows:
WTI Hardisty Alberta
at Edmonton Bow River Hardisty AECO US/Cdn
Cushing Par Price 24.9 Deg Heavy Average Exchange
Oklahoma 40 Deg API API 12 Deg API Price Rate
Year ($US/bbl) ($Cdn/bbl) ($Cdn/bbl) ($Cdn/bbl) ($Cdn/mcf) ($US/$Cdn)
----------------------------------------------------------------------------
2012 98.07 96.87 82.34 74.59 3.16 1.012
2013 94.90 93.75 79.69 72.19 3.78 1.012
2014 92.00 90.89 77.25 69.98 4.13 1.012
2015 97.42 96.23 81.80 74.10 5.53 1.012
2016 99.37 98.16 83.44 75.58 5.65 1.012
2017 101.35 100.12 85.10 77.09 5.77 1.012
2018 103.38 102.12 86.81 78.64 5.89 1.012
2019 105.45 104.17 88.54 80.21 6.01 1.012
2020 107.56 106.25 90.31 81.81 6.14 1.012
2021 109.71 108.38 92.12 83.45 6.27 1.012
Thereafter +2%/year +2%/year +2%/year +2%/year +2%/year 1.012
Twoco is an oil and gas company engaged in the exploration for, and the
acquisition, development and production of, oil and natural gas reserves
primarily in the Province of Alberta.
In this news release the calculation of barrels of oil equivalent (boe) is
calculated at a conversion rate of six thousand cubic feet (Mcf) of natural gas
for one barrel (Bbl) of oil based on an energy equivalency conversion method.
Boes may be misleading particularly if used in isolation. A boe conversion ratio
of 6 Mcf: 1Bbl is based on an energy equivalency conversion method primarily
applicable to the burner tip and does not represent a value equivalency at the
wellhead.
Forward-Looking Statements:
Certain information set forth in this news release contains forward-looking
statements or information ("forward-looking statements"), including statements
regarding the plan to diversify the Company's commodity mix through identified
oil prospects and future net revenues. By their nature, forward-looking
statements are subject to numerous risks and uncertainties, some of which are
beyond Twoco's control, including the impact of general economic conditions,
industry conditions, volatility of commodity prices, currency fluctuations,
imprecision of reserve estimates, environmental risks, operational risks in
exploration and development, competition from other industry participants, the
lack of availability of qualified personnel or management, stock market
volatility and the ability to access sufficient capital from internal and
external sources. Although Twoco believes that the expectations in our
forward-looking statements are reasonable, our forward-looking statements have
been based on factors and assumptions concerning future events which may prove
to be inaccurate. Those factors and assumptions are based upon currently
available information. Such statements are subject to known and unknown risks,
uncertainties and other factors that could influence actual results or events
and cause actual results or events to differ materially from those stated,
anticipated or implied in the forward looking information. As such, readers are
cautioned not to place undue reliance on the forward looking information, as no
assurance can be provided as to future results, levels of activity or
achievements. The risks, uncertainties, material assumptions and other factors
that could affect actual results are discussed in our Annual Information Form
and other documents available at www.sedar.com. Furthermore, the forward-looking
statements contained in this document are made as of the date of this document
and, except as required by applicable law, Twoco does not undertake any
obligation to publicly update or to revise any of the included forward-looking
statements, whether as a result of new information, future events or otherwise.
The forward-looking statements contained in this document are expressly
qualified by this cautionary statement.
This news release shall not constitute an offer to sell or the solicitation of
any offer to buy securities in any jurisdiction.
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