/NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR
FOR DISSEMINATION IN THE UNITED
STATES/
CALGARY, March 7, 2018 /CNW/ - Marquee Energy Ltd.
("Marquee" or the "Company") (TSXV: "MQX") is pleased to report its
reserve evaluation for the year ended December 31, 2017, as well as provide an update
on its first quarter drilling and completion operations.
RESERVE HIGHLIGHTS
- Total proved developed producing ("PDP") reserves increased 9%
to 5.3 mmboe;
- PDP reserves valuation discounted at 10% before tax was
$67 million, which represents a 22%
increase over year-end 2016. The PDP reserves valuation discounted
at 10% before tax is $0.15 per basic
share;
- Total proved ("TP") and total proved plus probable ("TPP")
reserves increased 15% and 28% to 13.9 mmboe and 22.6 mmboe
respectively year over year;
- Booked undeveloped drilling locations increased to 110 (65
proven and 45 probable);
- Reserves replacement ratio on a PDP, TP and TPP basis was 143%,
276% and 588%, respectively; and
- Sproule's evaluation included a 30% increase to the Michichi
Banff type curve over year-end 2016, increasing to 200 mboe from
154 mboe, both 65% oil and liquids.
OPERATIONAL UPDATE
- The two third quarter 2017 exploration wells, drilled to the
west of the Company's core Michichi Banff fairway, have each
averaged 45 barrels of oil per day ("bbl/d") over the last 30
days;
- The first well in Marquee's first quarter 2018 program was
successfully fractured with 28 stages, and brought on production in
mid-January. Initial production for the first 30 days ("IP30")
averaged 203 boe/d (81% oil and liquids, 19% gas); and
- The remaining four wells of the first quarter 2018 program have
been drilled. Completions and tie-in operations are anticipated to
be completed by month end, with post cleanup production results
expected by late April. Each of these wells will also receive 28
fracture stages.
2017 YEAR-END RESERVES
Sproule Associates Limited
("Sproule") evaluated Marquee's properties effective December 31, 2017, pursuant to a report dated
March 7, 2018. The independent
reserve evaluation has been prepared in accordance with NI 51-101
and the Canadian Oil and Gas Evaluation Handbook. Additional
reserves information required under NI 51-101 will be included in
Marquee's Annual Information Form to be filed on SEDAR in
April 2018.
Sproule based their evaluation on the Sproule price forecast,
dated December 31, 2017. The Reserves
Committee of the Board, and the Board of Directors of Marquee have
reviewed and approved the Sproule report.
Sproule Price Forecast Year over Year Comparison - 2017 vs.
2016
|
|
|
|
|
|
|
|
|
|
WTI Cushing
Oklahoma
$US/Bbl
|
2017 vs
2016 %
Change
|
Exchange Rate
$US/$Cdn
|
2017 vs
2016 %
Change
|
AECO - C Spot
$/GJ
|
2017 vs
2016 %
Change
|
Forecast
Year
|
|
2017
|
2016
|
%
|
2017
|
2016
|
%
|
2017
|
2016
|
%
|
2017
Historical
|
|
50.95
|
55.00
|
-7%
|
0.77
|
0.78
|
-1%
|
2.09
|
3.26
|
-35%
|
2018
Forecast
|
|
55.00
|
65.00
|
-15%
|
0.79
|
0.82
|
-4%
|
2.70
|
3.10
|
-13%
|
2019
Forecast
|
|
65.00
|
70.00
|
-7%
|
0.82
|
0.85
|
-4%
|
2.95
|
3.05
|
-3%
|
2020
Forecast
|
|
70.00
|
71.40
|
-2%
|
0.85
|
0.85
|
0%
|
3.46
|
3.70
|
-6%
|
2021
Forecast
|
|
73.00
|
72.83
|
0%
|
0.85
|
0.85
|
0%
|
3.60
|
3.79
|
-5%
|
2022
Forecast
|
|
74.46
|
74.28
|
0%
|
0.85
|
0.85
|
0%
|
3.75
|
3.88
|
-3%
|
Gross Company Reserves (1,2) As at December 31, 2017
|
|
|
|
|
Description
|
Light Crude
Oil
(Mbbl)
|
Conventional
Natural Gas
(MMcf)
|
Natural Gas
Liquids
(Mbbl)
|
Total
(Mboe)
|
Proved
producing
|
2,376
|
15,807
|
260
|
5,270
|
Proved
non-producing
|
86
|
415
|
9
|
164
|
Proved
undeveloped
|
5,600
|
15,145
|
357
|
8,481
|
Total
proved
|
8,062
|
31,367
|
625
|
13,915
|
Probable
|
5,366
|
17,885
|
381
|
8,728
|
Total proved plus
probable
|
13,428
|
49,251
|
1,006
|
22,643
|
(1)
|
Based on Sproule
December 31, 2017 forecast prices
|
(2)
|
Gross Company
reserves are the Company's total working interest share before the
deduction of royalties.
|
Summary of Before Tax Net Present Values, as at December 31, 2017(1)
|
|
Description
|
Before Tax Net
Present Value of Future Revenue ($M)
|
|
Discount
Rate
|
|
0%
|
5%
|
10%
|
15%
|
20%
|
Proved
producing
|
$98,321
|
$80,085
|
$66,995
|
$57,512
|
$50,446
|
Proved
non-producing
|
$8,351
|
$5,736
|
$4,006
|
$2,816
|
$1,971
|
Proved
undeveloped
|
$179,051
|
$121,018
|
$82,800
|
$57,557
|
$40,331
|
Total
proved
|
$285,722
|
$206,839
|
$153,801
|
$117,885
|
$92,748
|
Probable
|
$220,978
|
$150,839
|
$108,444
|
$81,356
|
$63,134
|
Total proved plus
probable
|
$506,700
|
$357,678
|
$262,246
|
$199,241
|
$155,882
|
|
Per Basic
Share
|
$1.16
|
$0.82
|
$0.60
|
$0.46
|
$0.36
|
(1)
|
Based on Sproule
December 31, 2017 forecast prices.
|
(2)
|
Benchmark commodity
prices used are adjusted for the quality of the commodities
produced and for transportation costs. The calculated NPVs
include a deduction for estimated future well abandonment and
reclamation but do not include a provision for interest, debt
service charges and general and administrative expenses. It
should not be assumed that the NPV estimates represent the fair
market value of the reserves.
|
Reconciliation of Reserves - Gross company interest
(1)
|
|
|
6:1 Oil Equivalent
(mboe)
|
|
Gross
Company
Interest Total Proved
|
Probable
|
Total Proved plus
Probable
|
December 31,
2016
|
12,126
|
5,555
|
17,681
|
|
Extensions
|
82
|
19
|
101
|
|
Infill
Drilling
|
1,341
|
1,285
|
2,626
|
|
Technical
Revisions
|
1,390
|
1,851
|
3,241
|
|
Economic Factors
(2)
|
-8
|
19
|
11
|
|
Production
|
-1,017
|
0
|
-1,017
|
December 31,
2017
|
13,915
|
8,728
|
22,643
|
(1)
|
Company Gross
Reserves means the Company's working interest reserves before
calculation of royalties, and before consideration of the Company's
royalty interests.
|
(2)
|
Economic Factors
include changes due to price forecast and royalties (year over year
changes in reserves caused by price forecast
adjustments).
|
Finding, Development and Acquisition Costs
Historical
Finding and Development ("F&D") and Finding, Development and
Acquisition ("FD&A") costs are reported below for 2016 and
2017. F&D costs for pre-2016 are nil, as Marquee, then
known as Alberta Oilsands Inc. ("AOS"), sold its reserves in 2012
and did not have any reserves until December
2016. The following table summarizes the Company's post
merger Finding, Development and Acquisition costs including changes
in Future Development Costs:
|
|
|
Finding,
Development and
Acquisition Costs ($)
|
2017
|
2016(1)
|
Total
Proved
|
Total
P+P
|
Total
Proved
|
Total
P+P
|
Exploration costs in
the year
|
4,777,449
|
4,777,449
|
37,071
|
37,071
|
Development costs in
the year
|
15,804,507
|
15,804,507
|
259,240
|
259,240
|
Less cap
G&A
|
(751,437)
|
(751,437)
|
(45,360)
|
(45,360)
|
Acquisitions(2)
|
-
|
-
|
29,621,323)
|
29,621,323
|
Change in
FDC
|
17,354,500
|
67,933,100
|
-
|
-
|
Total attributable
costs
|
37,185,019
|
87,763,619
|
29,872,274
|
29,872,274
|
|
|
|
|
|
Change in reserves
(mboe)
|
2,806.0
|
5,979.1
|
12,187.8
|
17,742.9
|
|
|
|
|
|
FD&A costs per
boe(3)
|
$
|
13.25
|
$
|
14.68
|
$
|
2.45
|
$
|
1.68
|
(1)
|
Marquee incurred
minimal capital cost post the December 6, 2016 amalgamation with
Alberta Oilsands Inc. ("AOS").
|
(2)
|
2016 acquisitions
comprised mainly of the Costs related to acquisition of Marquee
reserves by AOS.
|
(3)
|
See the "Oil and Gas
Advisories" section at the end of this press release for
information pertaining to these oil and gas metrics.
|
|
|
|
Finding and
Development Costs ($)
|
2017
|
2016(1)
|
Total
Proved
|
Total
P+P
|
Total
Proved
|
Total
P+P
|
Exploration costs in
the year
|
4,777,449
|
4,777,449
|
37,071
|
37,071
|
Development costs in
the year
|
15,804,507
|
15,804,507
|
259,240
|
259,240
|
Less cap
G&A
|
(751,437)
|
(751,437)
|
(45,360)
|
(45,360)
|
Acquisitions
|
-
|
-
|
-
|
-
|
Change in
FDC
|
17,354,500
|
67,933,100
|
-
|
-
|
Total attributable
costs
|
37,185,019
|
87,763,619
|
250,951
|
250,951
|
|
|
|
|
|
Change in
reserves(2)
|
2,806.0
|
5,979.1
|
-
|
-
|
|
|
|
|
|
F&D costs per
boe(3)
|
$
|
13.25
|
$
|
14.68
|
N/A
|
N/A
|
(1)
|
Marquee incurred
minimal capital cost post the December 6, 2016 amalgamation with
AOS.
|
(2)
|
All reserves in 2016
were attributed to the acquisition of Marquee reserves by
AOS.
|
(3)
|
See the "Oil and Gas
Advisories" section at the end of this press release for
information pertaining to these oil and gas metrics.
|
OPERATIONS UPDATE
Marquee's capital budget for the
first half of 2018 includes drilling and completing five 100%
working interest Banff horizontal
development wells at Michichi, Alberta. These wells are designed to expand on
the completion techniques implemented successfully in the third
quarter of 2017. At that time, interstage fracture spacing was
reduced from the historical average of 100 metres to 65
metres. Fracture spacing was further reduced to approximately
50 metres for each of the new first quarter drills. Management
believes increasing fracture density will increase well
productivity.
As of the date of this press release, all five planned first
quarter wells have been successfully drilled using monobore
technology in an average spud-to-rig-release time of nine days. The
first location (102/03-29-31-17W4) was successfully completed in
early January 2018 with 29 fracture
stages and was brought on production during the third week of
January 2018. Over the first 30 days
of production, the well has produced at an average of 203 boe/d,
consisting of 165 barrels of oil and liquids per day ("bbls/d") and
210 thousand cubic feet of natural gas per day (mcf/d).
The remaining four wells are scheduled to be completed by
mid-March, with on-production dates anticipated prior to the end of
March 2018. Post the fracture water
cleanup period, Marquee anticipates releasing well results four to
six weeks after the wells have been brought on production.
Marquee owns a large, contiguous, proven resource play at
Michichi, delineated with significant vertical well control and
trade 3D seismic. To date, a total of 40 sand fractured
Banff horizontal wells have been
drilled in the core Michichi fairway, where management believes it
can achieve predicable and repeatable well results on a program
average basis. Combining the geologic data with the ample
horizontal production information, Marquee has used its technical
expertise to delineate the asset into a development ready,
Southern Alberta light oil play
with 281 (net) internally identified drilling locations. Please see
the "oil and Gas Advisories" section for a description of these
drilling locations.
In the third quarter of 2017, the Company drilled two
exploration wells to test for the existence of a prospective
fairway to the west of the current development block at Michichi.
The wells also satisfied flow-through commitments related to
Canadian exploration expenses (CEE). Both wells encountered oil pay
throughout their 1,400-metre long horizontal sections and have been
producing since November 2017. Over
the last 30 days, the 15-25-32-18 W4 well averaged 57 mcf/d of gas
and 51 bbl/d of oil. Over the same time period, the 14-34-31-17 W4
well has averaged 67 mcf/d of gas and 37 bbl/d of oil. Management
will continue to evaluate the technical aspects of this emerging
play, while focusing near term capital allocation on the core
Banff development fairway at
Michichi.
CORPORATE PRESENTATION AND RELEASE OF YEAR-END AUDITED
RESULTS
Marquee's updated corporate presentation will be
available shortly at www.marquee-energy.com. The Company
expects to release fiscal year-end audited results on or about
April 12, 2018.
ABOUT MARQUEE
Marquee is a Calgary-based, junior energy Company focused
on light oil development and production in the Michichi area of
eastern Alberta. Marquee's shares
trade on the TSX Venture Exchange under the trading symbol
"MQX". Additional information about Marquee may be found
on its website www.marquee-energy.com and in its continuous
disclosure documents filed with Canadian securities regulators on
SEDAR at www.sedar.com.
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.
ABBREVIATIONS
bbl
|
Barrel
|
Mcf
|
thousand cubic
feet
|
Mbbl
|
thousand
barrels
|
MMcf
|
million cubic
feet
|
bbl/d
|
barrel per
day
|
Mcf/d
|
thousand cubic feet
per day
|
MMBtu
|
million British
Thermal Units
|
Bcf
|
billion cubic
feet
|
AECO
|
a natural gas storage
facility located at Suffield, Alberta
|
boe
|
barrel of oil
equivalent
|
mboe
|
thousand barrels of
oil equivalent
|
mmboe
|
million barrels of
oil equivalent
|
boe/d
|
barrel of oil
equivalent per day
|
M$
|
thousands of
dollars
|
MM$
|
millions of
dollars
|
WTI
|
West Texas
Intermediate, the reference price paid in U.S. dollars at Cushing,
Oklahoma
|
OIL AND GAS ADVISORIES
References to BOE
Barrels of oil equivalent (boe) may be misleading,
particularly if used in isolation. A boe conversion ratio of six
Mcf to one bbl is based on an energy equivalency conversion method
primarily applicable at the burner tip and do not represent a value
equivalency at the wellhead. Given that the value ratio based on
the current price of oil as compared to natural gas is
significantly different from the energy equivalency conversion
ratio of six to one, utilizing a boe conversion ratio of six Mcf to
one bbl may be misleading as an indication of value.
Initial Production Rates
Any references herein to production rates, test rates or
initial production rates (including IP30) are useful in confirming
the presence of hydrocarbons, however, such rates are not
determinative of the rates at which such wells will continue
production and decline thereafter. Readers are cautioned not to
place reliance on such rates in calculating the aggregate
production for Marquee. Initial production or test rates may be
estimated based on other third-party estimates or limited data
available at this time. Well-flow test result data should be
considered to be preliminary until a pressure transient analysis
and/or well-test interpretation has been carried out. In all cases
herein, initial production or test results are not necessarily
indicative of long-term performance of the relevant well or fields
or of ultimate recovery of hydrocarbons.
Drilling Locations
Marquee has three categories of drilling locations: (i)
proved locations; (ii) probable locations; and (iii) unbooked
locations. Proved locations and probable locations are derived from
Marquee's most recent independent reserves report prepared by
Sproule as at December 31, 2017 and
account for drilling locations that have associated proved and/or
probable reserves, as applicable. Unbooked locations are internal
estimates based on the Company's prospective acreage and
assumptions as to the number of wells that can be drilled per
section based on industry practice and internal review. Unbooked
locations do not have attributed reserves. Of Marquee's 281 (net)
Michichi Banff drilling locations, 58.5 are proved locations, 43.3
are probable locations, and the remaining 185 are unbooked
locations.
Unbooked locations have been identified by management as an
estimation of our multi-year drilling activities based on
evaluation of applicable geologic, seismic, engineering, production
and reserves information. There is no certainty that Marquee will
drill all unbooked drilling locations and if drilled there is no
certainty that such locations will result in additional oil and gas
reserves or production. The drilling locations on which Marquee
will actually drill wells will ultimately depend upon the
availability of capital, regulatory approvals, seasonal
restrictions, oil and natural gas prices, costs, actual drilling
results, additional reservoir information that is obtained and
other factors. While certain of the unbooked drilling locations
have been de-risked by drilling existing wells in relative close
proximity to such unbooked drilling locations, other unbooked
drilling locations are farther away from existing wells where
management has less information about the characteristics of the
reservoir and therefore there is more uncertainty whether wells
will be drilled in such locations and if drilled there is more
uncertainty that such wells will result in additional oil and gas
reserves or production. Unbooked locations were evaluated as of
March 7, 2018.
F&D costs and FD&A costs
This press release contains disclosure in respect of F&D
costs and FD&A costs, which are considered oil and gas metrics
within the meaning of National Instrument 51-101. F&D costs are
calculated as the sum of development capital plus the change in
future development capital for the period divided by the reserves
additions for the period. FD&A costs are calculated as the sum
of development capital plus the change in future development
capital and acquisition costs for the period divided by the
reserves. Management uses F&D costs as a measure to assess the
performance of the Company's resources required to locate and
extract new hydrocarbon reservoirs. The aggregate of the
exploration and development costs incurred in the most recent
financial year and the change during that year in estimated future
development costs generally will not reflect total finding and
development costs related to reserves additions for that year.
FD&A and F&D costs used by Marquee may not be comparable to
similar measures used by other issuers.
Table Totals
Amounts in tables may not add due to rounding
differences.
FORWARD-LOOKING STATEMENTS AND CAUTIONARY
STATEMENTS
This press release contains forward-looking
statements. Such forward-looking statements typically contain
statements with words such as "anticipate", "expect", "intend",
"estimate", "propose", or similar words suggesting future outcomes
or statements regarding an outlook. The forward-looking statements
contained in this document are based on certain key expectations
and assumptions made by Marquee, all or any of which may prove
incorrect, including without limitation the remaining
forward-looking statements, expectations and assumptions concerning
the timing and success of future drilling and development
activities.
Although Marquee believes that the expectations and
assumptions on which the forward-looking statements are based are
reasonable, undue reliance should not be placed on the
forward-looking statements because Marquee can give no assurance
that they will prove to be correct. Since forward-looking
statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual
results could differ materially from those currently anticipated
due to a number of factors and risks. These include, but are not
limited to, the failure to complete the proposed wells in a timely
manner, the failure to obtain necessary regulatory approvals, risks
associated with the oil and gas industry in general (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
reserves estimates; the uncertainty of estimates and projections
relating to production, costs and expenses; and health, safety and
environmental risks), uncertainty as to the availability of labour
and services, commodity price and exchange rate fluctuations,
unexpected adverse weather conditions and changes to existing laws
and regulations. Certain of these risks are set out in more detail
in Marquee's current Annual Information Form, which is available on
Marquee's SEDAR profile at www.sedar.com.
Forward-looking information is based on estimates and
opinions of management of Marquee at the time the information is
presented. Marquee may, as considered necessary in the
circumstances, update or revise such forward-looking information,
whether as a result of new information, future events or otherwise,
but Marquee undertakes no obligation to update or revise any
forward-looking information, except as required by applicable
securities laws.
Marquee's audit of its 2017 annual consolidated financial
statements is not yet complete and accordingly all financial
amounts referred to in this news release are unaudited and
represent management's estimates. Readers are advised that
these financial estimates are subject to audit and maybe subject to
change as result.
SOURCE Marquee Energy Ltd.