CALGARY, Feb. 6 /CNW/ - Breaker Energy Ltd. ("Breaker" or "Company") (TSX: WAV.A and WAV.B) achieved outstanding per share reserves and value growth in 2006 and is pleased to provide its 2006 reserves information (NI 51-101 compliant).
Highlights
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Breaker grew its reserves in 2006 by more than 155 percent to 12.5 million boe. The Company achieved strong per share reserves and net asset value growth on a cost effective basis despite being in an environment of increasing costs and decreasing commodity prices throughout the oil and gas sector. Through maintaining fiscal discipline and selecting quality capital investment opportunities, Breaker is pleased to report the following results for 2006:
Growth in Proved reserves per fully diluted share 62%
Growth in Proved plus Probable reserves per fully diluted share 51%
Estimated Net Asset Value (NAV) per fully diluted share of:
Using 5% BT (forecast pricing) $5.68/share
(21% increase from 2005 year end)
Using 10% BT (forecast pricing) $4.71/share
(13% increase from 2005 year end)
F&D Proved plus Probable (without future capital) $13.61/boe
FD&A Proved plus Probable (without future capital) $16.49/boe
FD&A Proved plus Probable (including future capital
discounted at 10%) $22.10/boe
Proved plus Probable Reserves Replacement Ratio 8.3
Proved plus Probable Reserve Life Index
(est. Q4/06 average production 4,000 boe/d) 8.5 years
Breaker's reserves quality improved, as demonstrated by the following
metrics:
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Percentage of Total
Proved Plus Probable
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2005 2006 Change
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Proved Developed Producing 41.7 48.5 16.1
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Proved Developed Non-Producing 5.7 5.9 2.9
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Proved Undeveloped 11.1 8.3 (24.8)
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Proved Total 58.5 62.7 7.1
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Probable 41.5 37.3 (10.0)
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The results presented above are based on unaudited, estimated total capital expenditures for 2006 of $142 million and unaudited, estimated 2006 production totaling 1,034,997 boe or an average of 2,836 boe/d, and forecast pricing (GLJ 2007-01).
Breaker 2006 Reserve Information
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In accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (NI 51-101), GLJ Petroleum Consultants Ltd. (GLJ) prepared the Breaker GLJ Report. This report evaluated, as at December 31, 2006, 100 percent of Breaker's oil, natural gas, and natural gas liquids reserves.
The tables below disclose in the aggregate, the Corporation's gross and net proved and proved plus probable reserves and Net Present Value (NPV) as estimated in the Breaker GLJ Report. These estimates were calculated using forecast prices and costs.
"Forecast prices and costs" means future prices and costs used by GLJ in the GLJ Report that are generally accepted as being a reasonable outlook of the future, or fixed or currently determinable future prices or costs to which the Corporation is bound.
"Total Company Interest" reserves refers to the sum of royalty interest and working interest reserves before deduction of royalty burdens payable. Royalty interest reserves include royalty volumes derived only from other working interest owners.
"Working Interest" reserves equate to those reserves that are referred to as "Company Gross" reserves by the Canadian Securities Administrators (CSA) in NI 51-101. Gross Reserves are Company gross reserves, which are the Company's working interest (operating or non-operating) share before deduction of royalties and without including any royalty interests of the Company.
"Net After Royalty" reserves are the Company's working interest (operating or non-operating) share after deduction of royalty obligations plus the Company's royalty interests in reserves.
The net present value of future net revenue attributable to Breaker's reserves is stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures, and well abandonment costs for only those wells assigned reserves by GLJ. It should not be assumed that the undiscounted or discounted net present value of future net revenue attributable to Breaker's reserves estimated by GLJ represent the fair market value of those reserves. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to effects of aggregations. Other assumptions and qualifications relating to costs, prices and future production and other matters are summarized herein. The recovery and reserve estimates of Breaker's oil, natural gas, and NGL reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein.
Summary of Reserves and Values
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Proved Total
Developed Proved Proved
Proved Non- Undevel- Total Total Plus
Producing producing oped Proved Probable Probable
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MARKETABLE
RESERVES
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Light/Medium
Oil (mbbls)
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Total Company
Interest 1,593 357 440 2,390 1,578 3,967
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Working
Interest 1,592 357 440 2,389 1,577 3,966
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Net After
Royalty 1,413 299 357 2,069 1,346 3,415
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Heavy Oil
(mbbls)
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Total Company
Interest 300 0 166 466 752 1,218
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Working Interest 300 0 166 466 752 1,218
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Net After Royalty 245 0 131 376 603 979
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Gas (mmcf)
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Total Company
Interest 23,425 2,226 2,474 28,125 13,278 41,403
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Working
Interest 23,034 2,226 2,372 27,633 12,931 40,564
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Net After
Royalty 18,051 1,564 2,065 21,680 10,313 31,993
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Natural Gas
Liquids (mbbls)
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Total Company
Interest 242 2 19 264 112 375
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Working Interest 240 2 19 262 111 373
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Net After Royalty 180 2 13 195 77 272
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Oil Equivalent (mboe)
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Total Company
Interest 6,039 730 1,038 7,807 4,655 12,461
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Working
Interest 5,971 730 1,021 7,722 4,596 12,317
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Net After
Royalty 4,846 562 846 6,253 3,744 9,998
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BEFORE TAX PRESENT VALUE ($MM)
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0% 134,311 13,443 13,020 160,775 104,199 264,974
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5% 115,386 11,351 9,196 135,933 73,948 209,880
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8% 106,683 10,323 7,437 124,443 61,554 185,998
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10% 101,694 9,718 6,433 117,845 54,901 172,746
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12% 97,239 9,170 5,539 111,947 49,243 161,190
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15% 91,386 8,439 4,373 104,197 42,225 146,423
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20% 83,360 7,422 2,797 93,578 33,387 126,965
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The above summary of reserves and values was based on the following price
and cost assumptions:
Summary of Pricing and Inflation Rate Assumptions (Forecast Prices and
Costs) GLJ 2007-01
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Edmonton Hardisty Cromer
Par Price Heavy Medium Natural
40 12 29.3 Gas AECO
WTI degrees degrees degrees Spot Infla- Exchange
Cushing API API API Price tion Rate
(Oklahoma) ($Cdn/ ($Cdn/ ($Cdn/ ($Cdn/ Rate ($US/
Year ($US/bbls) bbls) bbls) bbls) mmbtu) (%/yr) $Cdn)
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2007 62.00 70.25 39.25 61.25 7.20 2.0 0.870
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2008 60.00 68.00 40.00 59.25 7.45 2.0 0.870
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2009 58.00 65.75 39.75 57.25 7.75 2.0 0.870
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2010 57.00 64.50 39.75 56.00 7.80 2.0 0.870
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2011 57.00 64.50 40.25 56.00 7.85 2.0 0.870
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2012 57.50 65.00 41.50 56.50 8.15 2.0 0.870
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2013 58.50 66.25 42.50 57.75 8.30 2.0 0.870
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2014 59.75 67.75 43.50 59.00 8.50 2.0 0.870
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2015 61.00 69.00 44.25 60.00 8.70 2.0 0.870
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2016 62.25 70.50 45.25 61.25 8.90 2.0 0.870
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2017 63.50 71.75 46.00 62.50 9.10 2.0 0.870
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Thereafter +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr 2.0 0.870
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Breaker Reserves Reconciliation (Forecast Prices and Costs, unaudited)
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Proved Total Total Proved
Oil Equivalent (mboe) Producing Proved Plus Probable
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Opening Balance 2,038.7 2,857.3 4,884.9
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Technical 593.0 314.4 79.0
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Exploration Discoveries 947.1 1,057.5 1,394.1
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Drilling Extensions 433.4 459.2 493.9
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Infill Drilling 147.1 713.1 1,527.9
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Improved Recovery 0.0 103.5 238.8
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Acquisition 2,900.2 3,322.3 4,863.2
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Production -1,035.0 -1,035.0 -1,035.0
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Closing Balance 6,038.9 7,806.6 12,461.2
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Breaker Finding, Development, and Acquisition (FD&A) Costs (unaudited)
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Proved Plus
Capital Costs ($MM) unaudited Proved Probable
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Exploration and Development Capital Expenditures 51.0 51.0
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Acquisition Expenditures 91.0 91.0
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Future Development Costs (FDC) (discounted 10%) 24.6 48.3
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Proved Plus
FD&A Costs ($/boe) unaudited Proved Probable
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Exploration and Development, without FDC 19.16 13.61
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Acquisitions, without FDC 27.39 18.71
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All-in FD&A, without FDC 23.73 16.49
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All-in FD&A, with FDC 27.83 22.10
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Breaker's costs to add reserves were differentiated by acquisition and
ongoing exploration and development activities. Over 2006, exploration and
development yielded lower reserve addition costs than acquisition additions.
It is expected as Breaker develops the properties acquired during 2006 that
additional reserves and production will result which are not currently booked.
Breaker 2006 Net Asset Value per Fully Diluted Share Information
(unaudited)
Using Reserve Value at December 31, 2006 - Forecast Pricing and Costs:
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($MM except share amounts) 5% BT 10% BT
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Proved Plus Probable Reserve Value
(incl. future capital) 209.9 172.7
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Undeveloped Land (212,900 acres at $125/acre) 26.6 26.6
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Seismic 9.9 9.9
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Estimated Net Debt (35.1) (35.1)
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Option Proceeds 6.4 6.4
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Total Net Assets 217.7 180.6
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Fully Diluted Shares Outstanding (MM) 38.3 38.3
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Estimated Net Asset Value per
Fully Diluted Share ($) 5.68 4.71
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In addition to the approximately 213,000 net acres of undeveloped land that Breaker has an ownership interest in, the Company also had access to approximately 133,500 acres via farmin.
Summary
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In 2006 Breaker added 8.6 million boe of high-quality oil and gas reserves via total capital expenditures of approximately $142 million (unaudited). Breaker executed on its business plan of making strategic acquisitions balanced with a focused exploration, development and exploitation plan, which resulted in the following at year end 2006:
- Proved plus Probable reserves growth to 12.5 million boe, a
155 percent increase over year end 2005.
- Increased Proved reserves per fully diluted share by 62% in 2006.
- Increased Proved plus Probable reserves per fully diluted share by
51% in 2006.
- Net Asset Value (BT 5%) of $5.68 per fully diluted share based on
forecast price assumptions.
- F&D Proved plus Probable (without future capital) of $13.61/boe in
2006.
- FD&A Proved plus Probable (without future capital) of $16.49/boe in
2006.
- FD&A Proved plus Probable (including future capital) of $22.10/boe in
2006.
- Proved plus Probable Reserve Life Index (based on est. Q4 2006
average production) 8.5 years.
- Current inventory of more than 200 drilling locations for oil and
natural gas.
- Breaker maintains an excellent balance sheet with a bank line of
$71 MM and estimated debt/fourth quarter annualized cash flow of 0.9.
Breaker Energy Ltd. is a junior oil and gas company focused on creating shareholder value by growing per share production and reserves through acquisitions and a focused exploration, development and exploitation plan.
Breaker has 34,848,508 Class A shares and 900,000 Class B shares outstanding.
Breaker Energy trades on the TSX under the symbols WAV.A and WAV.B.
Forward-looking Statements
This press release contains forward-looking statements including management's assessment of future plans and operations, expectations of future production, cash flow and earnings. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. 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), acquisitions, commodity price and exchange rate fluctuation and uncertainties resulting from competition from other producers and ability to access sufficient capital from internal and external sources. Additional information on these and other factors that could affect Breaker's operations and/or financial results are included in Breaker's reports on file with Canadian securities regulatory authorities. The forward-looking statements contained in this press release are made as of the date hereof and Breaker undertakes no obligation 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.
Note: Boe means barrel of oil equivalent on the basis of 1 boe to 6,000 cubic feet of natural gas. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 1 boe for 6,000 cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Boe/d means barrel of oil per day.
In this press release: (i) mmboe means million boe; (ii) boe/d means boe per day; (iii) bbls/d means barrels per day; (iv) mcf means thousand cubic feet; (v) mmcf means million cubic feet; (vi) mcf/d means thousand cubic feet per day; and (vii) mmcf/d means million cubic feet per day.
The TSX does not accept responsibility for the adequacy or accuracy of
this release.
%SEDAR: 00021180E