Edge Resources Inc. Announces Major Increase in Year-End Reserves
and Provides an Operational Update
CALGARY, ALBERTA--(Marketwired - May 8, 2014) - Edge Resources
Inc. ("Edge" or the "Company") (TSX-VENTURE:EDE)(AIM:EDG) is very
pleased to have finalized its year-end NI 51-101 reserve report*,
which has resulted in a large increase to its year-end reserves.
The Company also provides an operational update.
Year End Reserves
The value of Edge's Proved + Probable ("P+P") reserves increased
by 44% to $129.0 million ($0.79/share), effective March 31 2014
from $89.4 million, one year earlier. The majority of growth came
in the form of Proved reserve value (72% year-on-year growth)
versus Probable reserve value (22% year-on-year growth).
The Company's total Proved Developed Producing ("PDP") reserve
value grew by 75% to $34.2 million, contributing to Total Proved
("TP") reserve value of $69.2 million, representing approximately
$0.42/share.
P+P reserves increased to 7.6 million boe, half of which (3.7
million boe) were generated from the Company's core asset, Eye
Hill, Saskatchewan. Specifically in Eye Hill, the value of PDP
reserves grew by 145%, TP reserve value grew by 100% and total P+P
Reserve value grew by 47%.
The reserve replacement ratio (reserves added/reserves produced
during the year) was 458%.
The Company has established a consistent track record of adding
reserves at an exceptionally low-cost. During the 12 month period
ending March 31, 2014 the Company's total Finding, Developing and
Acquisition ("FD&A") costs were $3.8 million(1). Thus, Edge's
FD&A cost of adding Proved reserves was $3.89 per boe and the
FD&A cost for additional P+P reserves was $2.86 per boe. The
table below provides a comparison of the Company's historical cost
of reserve additions, year-end P+P reserve values and reserve
replacement ratios:
Year Ended |
FD&A Cost per Proved BOE ($) |
FD&A Cost per P+P BOE ($) |
P+P NPV10 ($)* |
Reserve Replacement Ratio |
March
31, 2014(1) |
$3.89 |
$2.86 |
$129.0 million |
458% |
March
31, 2013 |
$9.14 |
$2.69 |
$89.4
million |
749% |
March
31, 2012 |
$21.87 |
$10.24 |
$65.1
million |
667% |
March
31, 2011 |
$10.16 |
$6.06 |
$46.5
million |
3,725% |
March
31, 2010 |
$5.29 |
$2.08 |
$16.5
million |
n/a |
(1) |
Financial information is from Edge's preliminary unaudited
financial statements for the year ended March 31, 2014 and is
subject to change. FD&A costs for all years excludes Future
Development Capital ("FDC"). |
Brad Nichol, President and CEO of Edge commented, "Edge's
long-term strategic focus on conventional, shallow, low-cost,
repeatable reservoirs continues to deliver shareholder value with
reserve growth exceeding even our high expectations this year.
What's more, in preparation for our reserve report, we only
requested six additional drilling locations in Eye Hill East (less
than 1/10th of what we believe we have to drill there), resulting
in a large but very conservative value of reserves."
Operational Update
Wellhead production averaged over 700 boepd in March, provided
revenue of $1.2 million, which allowed the Company to break the
monthly revenue record previously set in February 2014. As a
result, cash flow in March also significantly exceeded February's
number.
Due primarily to additional production from the new CHOPS ("Cold
Heavy Oil Production with Sand") oil wells, average production,
revenue and cash flow for the quarter ended March 31 2014 is
expected to be significantly higher than the previous quarter. With
production levels having held steady in April, the trend is
expected to continue into the Company's first quarter, which ends
June 30, 2014.
Nichol commented, "As I stated last month, we are on track for
another excellent quarter. As predicted, we beat our record-setting
February million dollar month with an even bigger March and we
expect April's figures, when finalized, to maintain this level."
Speaking of the ongoing geoscience and engineering preparations for
the upcoming 2014 drilling program, Nichol continued, "Our
geological and geophysical teams continue to add more locations to
our large drilling inventory in Eye Hill, most of which are not
included in the reserve report. We are eager to exploit this
inventory in 2014 and with the continued improvements in cash flow,
we currently expect to fund future drilling activities utilizing
existing cash reserves."
Additional information may also be available at www.edgeres.com
or www.sedar.com.
About Edge Resources Inc.
Edge Resources is focused on developing its heavy oil properties
within a balanced portfolio of oil and natural gas assets from
properties in Alberta and Saskatchewan, Canada. Management has
consistently focused on:
- Shallow, vertical, conventional programs with reduced capital,
operational and geological risks
- Very high or 100% working interests and fully operated
assets
- Pools and horizons with exceptionally high reserves in
place
The management team's very high drilling success rate is based
on the safe, efficient deployment of capital and a proven ability
to efficiently execute in shallow formations, which gives Edge
Resources a sustainable, low-cost, competitive advantage.
* The Company's most recent NI 51-101 reserve report is
effective March 31, 2014, and reserve values are based on pre-tax
net asset value using AJM Deloitte's March 31, 2014 forecast
pricing, discounted at 10%. Reserve values do not include
abandonment liabilities, which are included at the corporate level.
For comparative purposes, March 31, 2014 year end P+P reserve
value, including abandonment liabilities, is CDN$127.0 million
(compared to CDN$129.0 million when abandonment liabilities are
excluded). The reserve report was prepared under Canadian National
Instrument 51-101: Standards of Disclosure for Oil and Gas
Activities.
In accordance with National Instrument
51‐101 ‐ Standards of
Disclosure for Oil and Gas Activities ("NI
51‐101"), the Company's oil, natural gas and
natural gas liquids ("NGL") reserves were evaluated by an
independent engineering firm, AJM Deloitte as at March 31, 2014.
Gross reserves included in this release are Edge's working interest
reserves before royalty burdens. Complete NI 51-101 reserves
disclosure will be included in Edge's annual NI 51-101 filings
which will be filed prior to July 31, 2014 and made available at
www.sedar.com. The Company's aggregate proved and probable reserves
are reported in barrels of oil equivalent (boe). Boe may be
misleading, particularly if used in isolation. A boe conversion
ratio for natural gas of 6 Mcf: 1 boe has been used, which is based
on an energy equivalency conversion method primarily applicable at
the burner tip and does not necessarily represent a value
equivalency at the wellhead. As the value ratio between natural gas
and crude oil based on the current prices of natural gas and crude
oil is significantly different from the energy equivalency of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
The term "bopd" means "barrels of oil per day." The term
"boepd" means "barrels of oil equivalent per day."
Unaudited Financial Information
Certain financial and operating information included in this
press release for the year ended March 31, 2014, such as capital
expenditures, production, F&D costs and FD&A costs are
based on unaudited financial results, and are subject to the same
limitations as discussed under "Forward-Looking Information". These
estimated amounts may change upon the completion of audited
financial statements for the year-ended March 31, 2014 and changes
could be material.
Forward-Looking Statements
This news release includes certain information, with
management's assessment of Edge's future plans and operations, and
contains forward-looking statements which may include some or all
of the following: (i) anticipated production rates; (ii) expected
results of capital programs; (iii) expected timelines for
production optimization; (iv) net debt levels; (v) anticipated
operating costs; and (vi) expected capital projects and associated
spending; which are provided to allow investors to better
understand the Company's business. By their nature, forward-looking
statements are subject to numerous risks and uncertainties; some of
which are beyond Edge's control, including the impact of general
economic conditions, industry conditions, volatility of commodity
prices, currency fluctuations, imprecision of reserve estimates,
environmental risks, changes in environmental tax and royalty
legislation, competition from other industry participants, the lack
of availability of qualified personnel or management, stock market
volatility and ability to access sufficient capital from internal
and external sources, and other risks and uncertainties described
under the heading 'Risk Factors' and elsewhere in the Company's
Management Discussion and Analysis and other documents filed with
Canadian provincial securities authorities and are available to the
public at www.sedar.com. Readers are cautioned that the assumptions
used in the preparation of such information, although considered
reasonable at the time of preparation, may prove to be imprecise
and, as such, undue reliance should not be placed on
forward-looking statements. The principal assumptions Edge has made
includes security of land interests; drilling cost stability;
finance and debt markets continuing to be receptive to financing
the Company, the ability of the Company to monetize non-core assets
and industry standard rates of geologic and operational success.
Actual results could differ materially from those expressed in, or
implied by, these forward-looking statements. Edge disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law. For more information on
the Company, Investors should review the Company's registered
filings which are available at www.sedar.com.
This news release shall not constitute an offer to sell or
the solicitation of any offer to buy, nor shall there be any sale
of these securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful. The securities offered have
not been and will not be registered under the U.S. Securities Act
of 1933, as amended, and may not be offered or sold in the United
States absent registration or applicable exemption from the
registration requirements of the U.S. Securities Act and applicable
state securities laws.
Trading in the securities of Edge Resources Inc. should be
considered highly speculative. Neither the 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.
Edge Resources Inc.Brad NicholPresident & CEO+1 (403) 767
9905Edge Resources Inc.Ward Kondas+1 (778)
918-8384wkondas@edgeres.comwww.edgeres.com
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